SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported) April 2, 1999
OLYMPUS COMMUNICATIONS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 333-19327 25-1622615
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
OLYMPUS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 333-19327 23-2868925
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
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Main at Water Street - Coudersport, PA 16915-1141
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (814) 274-9830
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Item 5. Other Events
Olympus Communications, L.P. ("Olympus") is a joint venture limited partnership
between a subsidiary of Adelphia Communications Corporation and subsidiaries of
FPL Group. The Registrant is filing certain documents with regard to Olympus.
Item 7. Financial Statements and Exhibits
Exhibit 10.1 Purchase and Sale Agreement by and among Cable TV Fund
12-A, LTD (as Seller), Jones Intercable, Inc. and
Olympus Communications, L.P. (as Buyer)
Exhibit 10.2 First Amendment, dated as of July 31, 1998 for the
Amended and Restated Credit Agreement dated as of
March 29, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 2, 1999 OLYMPUS COMMUNICATIONS, L.P.
BY: ACP HOLDINGS, INC.
Managing General Partner
By: /s/Timothy J. Rigas
Timothy J. Rigas
Executive Vice President,
Treasurer, Principal
Accounting Officer and
Principal Financial Officer
of ACP Holdings, Inc.
Date: April 2, 1999 OLYMPUS CAPITAL CORPORATION
By: /s/Timothy J. Rigas
Timothy J. Rigas
Executive Vice President,
Treasurer, Principal
Accounting Officer and
Principal Financial Officer
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EXHIBIT INDEX
Exhibit 10.1 Purchase and Sale Agreement by and among Cable TV Fund
12-A, LTD (as Seller), Jones Intercable, Inc. and
Olympus Communications, L.P. (as Buyer)
Exhibit 10.2 First Amendment, dated as of July 31, 1998 for the
Amended and Restated Credit Agreement dated as of
March 29, 1996.
Exhibit 10.1
PURCHASE AND SALE AGREEMENT
BY AND AMONG
CABLE TV FUND 12-A, LTD.
as Seller
JONES INTERCABLE, INC.
AND
OLYMPUS COMMUNICATIONS, L.P.
as Buyer
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TABLE OF CONTENTS
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1. PURCHASE AND SALE OF ASSETS...........................................................................1
1.01 Transfer of Assets...............................................................................1
1.02 Assumed Liabilities..............................................................................2
1.03 Excluded Assets..................................................................................4
2. CLOSING DATE, PURCHASE PRICE, PAYMENT & ADJUSTMENTS...................................................5
2.01 Closing Date and Location........................................................................5
2.02 Purchase Price...................................................................................5
2.03 Deposit..........................................................................................5
2.04 Payment of the Purchase Price....................................................................5
2.05 Allocation of Purchase Price.....................................................................6
2.06 Adjustments to the Purchase Price Prorations.....................................................6
2.07 Non-Competition Agreements.......................................................................8
3. REPRESENTATIONS WARRANTIES AND COVENANTS OF SELLER....................................................8
3.01 Partnership Standing.............................................................................9
3.02 Authorization....................................................................................9
3.03 Financial Statements.............................................................................9
3.04 Title to Assets.................................................................................10
3.05 The Acquired Systems............................................................................10
3.06 Franchises......................................................................................15
3.07 Pole Attachment Agreements......................................................................16
3.08 Head-end Sites and Office Locations.............................................................17
3.09 Other Contracts and Leases......................................................................17
3.10 Agreements with Employees.......................................................................18
3.11 Litigation or Judgments.........................................................................18
3.12 Tax Returns and Payments........................................................................18
3.13 Compliance with Laws............................................................................19
3.14 Adverse Developments............................................................................19
3.15 Condition of Assets to be Acquired and Insurance................................................19
3.16 Patents, Trademarks and Copyrights..............................................................19
3.17 Labor Relations.................................................................................20
3.18 Restoration.....................................................................................20
3.19 Bulk Sales Compliance...........................................................................20
3.20 Right of First Refusal..........................................................................20
3.21 Environmental Matters...........................................................................20
3.22 Equivalent Basic Subscribers; Gross Revenues....................................................21
3.23 HSR Act Filing..................................................................................21
3.24 Disclosure......................................................................................22
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER...................................................22
4.01 Status, Power and Authority.....................................................................22
4.02 Authorization of Agreement......................................................................22
4.03 Litigation......................................................................................23
4.04 HSR Act Filing..................................................................................23
4.05 Consummation of Agreement.......................................................................23
5. CONDUCT OF BUSINESS OF ACQUIRED SYSTEMS PENDING CLOSING AND ADDITIONAL COVENANTS OF SELLER...........23
5.01 Maintenance of Business.........................................................................23
5.02 Insurance.......................................................................................24
5.03 Organization....................................................................................25
5.04 Access for Investigation........................................................................25
5.05 Notice..........................................................................................25
5.06 Consummation of Agreement.......................................................................25
5.07 Cooperation with Buyer..........................................................................25
5.08 Accounts List...................................................................................25
5.09 FCC Approval....................................................................................26
5.10 Certificates....................................................................................26
5.11 Third-Party Consents............................................................................26
5.12 Approval of Franchise Authorities...............................................................26
5.13 FCC and Other Regulatory Compliance.............................................................27
5.14 Approval of Lessors.............................................................................27
5.15 Employees.......................................................................................27
5.16 Transitional Billing Services...................................................................27
5.17 Financial Statements............................................................................28
6. CONDITIONS TO CLOSING - BUYER........................................................................28
6.01 Conditions to Obligations of Buyer..............................................................28
7. CONDITIONS TO CLOSING - SELLER.......................................................................31
7.01 Conditions to Obligations of Seller.............................................................31
8. CLOSING..............................................................................................32
8.01 Action to be Taken at and after Closing.........................................................32
9. REAL ESTATE PRORATION AND ADJUSTMENT ITEMS...........................................................34
10. DAMAGE TO PROPERTY AND RISK OF LOSS..............................................................34
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.........................................35
11.01 Survival of Representations and Warranties.....................................................35
11.02 Indemnification................................................................................35
11.03 Indemnification with Respect to Third-Party Claims.............................................36
12. TERMINATION AND REMEDIES............................................................................40
12.01 Termination by Mutual Agreement................................................................40
12.02 Buyer's Default................................................................................40
12.03 Seller's Default...............................................................................40
12.04 Termination by Buyer or Seller.................................................................41
13. NOTICE..............................................................................................41
14. BROKERAGE COMMISSION................................................................................42
15. LAWS GOVERNING......................................................................................42
15.01 Laws Governing.................................................................................42
15.02 Consent to Jurisdiction........................................................................43
16. MISCELLANEOUS.......................................................................................43
16.01 Counterparts; Telecopy.........................................................................43
16.02 Assignment.....................................................................................43
16.03 Entire Agreement...............................................................................43
16.04 Interpretation.................................................................................43
16.05 Expenses.......................................................................................44
16.06 Confidentiality................................................................................44
16.07 Public Announcements...........................................................................44
16.08 Waivers........................................................................................45
16.09 Partial Invalidity.............................................................................45
16.10 Incorporation by Reference.....................................................................45
16.11 Attorneys'Fees.................................................................................45
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AGREEMENT
THIS AGREEMENT is made this 19th day of March, 1998, by and among
CABLE TV FUND 12-A, LTD., a Colorado limited partnership ("Seller"), OLYMPUS
COMMUNICATIONS, L.P. ("Buyer") and, solely with respect to its obligations in
Section 11 hereof, JONES INTERCABLE, INC. ("Jones").
RECITALS
WHEREAS, Seller owns and operates cable television
("CATV") systems in and around the communities of Lee County, Florida and the
City of Ft. Myers, Florida (the "Acquired Systems"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, on the terms and conditions hereinafter set forth, all
of the assets of Seller used by, or useful to, Seller in connection with the
operation of the Acquired Systems, except the Excluded Assets (as defined in
Section 1.03); and
WHEREAS, Jones is the general partner of Seller.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and each act done pursuant hereto, the parties
hereto, intending to be legally bound, do represent, warrant, covenant and agree
as follows:
1. PURCHASE AND SALE OF ASSETS.
1.01 Transfer of Assets. On the Closing Date, as defined in Section
2.01, Seller shall sell, convey, transfer and assign to Buyer, and Buyer shall
purchase from Seller, all of the assets of Seller of every kind and character,
real, personal, tangible, intangible or mixed, used by, or useful to, Seller in
connection with the operation of, the Acquired Systems in existence on the
Closing Date (the "Assets to be Acquired"), which shall include, but not be
limited to, the following:
(a) All items of tangible personal property owned or leased
and used by Seller in connection with the operation of the Acquired Systems,
including all equipment associated with receiving and distributing signals at
the headend sites, and all other antennas and down leads and all electronic
equipment, headend amplifiers and associated equipment, line amplifiers, aerial
and underground trunk and feeder line cable, distribution plant, programming
signal decoders for each satellite service which scrambles its signal,
converters, housedrops, including disconnected housedrops, installed subscriber
devices, utility poles, local origination equipment (wherever located), test
equipment, machinery, spare equipment and parts inventory, housedrop equipment
inventory, system design and engineering maps and drawings, supplies, vehicles
and trailers (to be transferred under fee title and not under lease),
furnishings and other personal property of any nature, and all real property
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interests owned or leased and used by Seller in connection with the operation of
the Acquired Systems, including all fee interests, leasehold interests and
rights-of-way in real property, buildings and improvements and
construction-in-progress, towers, fixtures, poles, vaults and pedestals.
(b) All of the rights of Seller to, in and under any and all
subscription contracts with subscribers for CATV service relating to the
Acquired Systems; except as provided in Section 1.03, all instruments and
agreements for the purchase, sale or other receipt or distribution of
programming, news, data and microwave relay signals relating to the Acquired
Systems which Buyer expressly agrees to include among the Assets to be Acquired
at Closing; and all of the Franchises (as herein defined) and any franchise
applications; all of the Pole Attachment Agreements (as herein defined) and all
retransmission consent agreements relating to the Acquired Systems which Seller
does not retain as provided in Section 1.03(c); all variances, easements,
right-of-way agreements, licenses, registrations, copyright notices, signal
registration and other statements, construction and other permits, leases,
including leases of all head-end sites, and all other contracts or agreements
relating to the Acquired Systems.
(c) All options, claims and contract rights and all goodwill
relating to the Acquired Systems; all subscriber accounts receivable of the
Acquired Systems for all periods prior and subsequent to Closing; subscriber and
customer lists and subscription contracts of the Acquired Systems; and all books
and records which relate solely to the operation of the Acquired Systems
(including, without limitation, subscriber records, vendor records, accounting
records, accounts payable records, accounts receivable records, general ledgers
and any other documents necessary to support a regulatory filing); provided,
however, that Seller shall provide Buyer with access to such other books and
records of Seller as is reasonably necessary for Buyer's review and operation of
the Acquired Systems for a period of three years subsequent to the date of
Closing. Seller acknowledges and agrees that Buyer shall be the exclusive owner
of all subscriber and customer lists relating to the Acquired Systems subsequent
to Closing.
(d) All of the rights of Seller to, in and under that Joint
Venture Agreement dated as of April 27, 1992, between Seller and Palmer
Communications Incorporated, a Delaware corporation, as the same has been
amended or extended from time to time (the "Joint Venture Agreement") which
Joint Venture Agreement created the venture otherwise known as Southwest Florida
Cable Advertising.
1.02 .Assumed Liabilities. At the Closing on the Closing Date, Buyer
shall assume, by instruments of assumption reasonably satisfactory to counsel
for Seller, and discharge at the Closing or as they become due and payable, the
following liabilities and obligations of Seller and no others:
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(a) All obligations of the Seller arising after the Closing
Date under the Franchises, Leases and Rights-of-Way, Pole Attachment Agreements,
licenses, and any agreements, consents, permits and other instruments relating
to the Acquired Systems and in existence on the Closing Date and entered into in
the ordinary course of business to the extent included in the Assets to be
Acquired;
(b) The obligations of Seller for subscriber deposits and
subscriber advance payments, any other liabilities and obligations of Seller
shown on the 1998 balance sheets of Seller as current liabilities, part of
Schedule 3.03 attached hereto, to the extent that such liabilities are so shown
and have not been paid prior to the Closing Date, and other obligations and
liabilities of Seller relating to the Acquired Assets but only to the extent
that there is an adjustment to the Purchase Price in favor of Buyer with respect
thereto;
(c) All unpaid liabilities and obligations of the Seller
incurred in its operations in the ordinary course of business from the date of
December 31, 1997, balance sheets to the Closing Date which would appear as
current liabilities on a balance sheet prepared in accordance with generally
accepted accounting principles ("GAAP") and are identified by name and amount on
an update to Schedule 3.03 to be delivered by Seller to Buyer on the Closing
Date but only to the extent that there is an adjustment to the Purchase Price in
favor of Buyer with respect thereto; and
(d) All obligations of Seller arising after the Closing Date
under the Joint Venture Agreement, including, but not limited to, capital
contributions required to be made thereunder and any obligations or liabilities
related to Southwest Florida Cable Advertising.
The liabilities and obligations described in this Section 1.02, to the
extent they are to be assumed by Buyer, shall be herein referred to as the
"Assumed Liabilities." Buyer shall assume only those Assumed Liabilities
specifically stated in this Section 1.02 and no others. Without limiting the
foregoing and except as provided above where an adjustment to the purchase price
has been made, Buyer shall not assume or become liable for (i) any income,
profits, franchise, sales, use, occupation, property, excise, ad valorem or any
other tax to which the Assets to be Acquired are subject prior to the Closing
Date, and Buyer shall not assume or become liable for any liability or tax due
as a result of any contest, audit or other tax proceeding involving Seller or
the Assets to be Acquired for any taxable period ending on or prior to the
Closing Date, except as otherwise provided herein, (ii) any liabilities relating
to the Excluded Assets, (iii) any liability for franchise fees, pole attachment
fees, leasehold rentals, any obligation for wages, commissions, overtime,
vacation and holiday pay, sick pay, bonuses, other employee benefits or any
pension withdrawal liability, any on-going workers' compensation benefits for
any accident arising prior to the Closing Date except for accrued overtime, sick
pay, vacation pay, holiday pay or other employee benefits treated as a current
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liability under Section 2.06(b)(xii) hereof, or any obligation under any
employment agreement or employment-at-will relationship other than obligations
arising from and after the Closing Date, or (iv) any liability or obligation of
Seller which is not a current liability as defined under GAAP and which is not
included as part of the Working Capital Adjustment pursuant to Section 2.06(a)
or (b).
1.03 Excluded Assets. Notwithstanding the foregoing, it is specifically
agreed that the following assets are excluded from the Assets to be Acquired
(collectively, the "Excluded Assets"):
(a) all cash and cash equivalents on hand or in the bank accounts of
Seller;
(b) all satellite programming agreements and agreements which Seller
maintains with any of its respective suppliers of programming;
(c) any retransmission consents, must carry or will carry agreements
designated on Schedule 1.03 which Seller maintains that relate to broadcast
signals which are carried on other Jones cable systems;
(d) all documents relating to the legal existence of the Seller;
(e) all insurance policies, intercompany receivables, letters of credit
and surety bonds and any cash surrender value in regard thereto;
(f) all claims, rights and interest in and to any refunds for federal,
state or local income or other taxes or fees of any nature whatsoever for
periods prior to the Closing Date, including, without limitation, fees paid to
the United States Copyright Office;
(g) any books and records that Seller is required by law to retain,
subject to the right of Buyer to have access to and to copy for a reasonable
period, not to exceed five years from the Closing Date, and other books and
records related to internal corporate matters and financial relationships with
Seller's lenders, provided that nothing herein shall limit Buyer's right to
receive at Closing copies of all documents, books and records necessary in
connection with the operation of the Business;
(h) the trademarks, trade names, copyrights, service marks and all
other information and similar intangible assets relating to Seller or the
Acquired Systems;
(i) contracts and agreements relating to Seller's subscriber billing
system and all equipment related thereto;
(j) any of the Assets to be Acquired sold or otherwise disposed of in
the ordinary course of business and not in violation of the terms and provisions
of this Agreement between the date of this Agreement and the Closing Date;
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(k) all interest of Seller and/or Jones, if any, in Gateway/Jones
Communications, Ltd.; and
(l) The rights, assets and properties described on Schedule 1.03.
2. CLOSING DATE, PURCHASE PRICE, PAYMENT & ADJUSTMENTS.
2.01 Closing Date and Location. The consummation of the transfer and
delivery of the Assets to be Acquired to Buyer and the receipt of the
consideration therefor by Seller shall constitute the "Closing." Unless
otherwise mutually agreed to by the parties, the Closing shall take place at
10:00 a.m., local time, at the offices of Jones Intercable, Inc., 9697 East
Mineral Avenue, Englewood, Colorado 80112. The parties agree to close the
transactions contemplated by this Agreement upon a date designated in a Closing
Notice, as herein defined, which in no event shall be sooner than ten (10)
business days after either party's receipt of such Closing Notice, which
specified date and time shall constitute the "Closing Date." A party shall have
the right to deliver a Closing Notice once all of the conditions to Closing set
forth in Sections 6 and 7 have been satisfied or waived. Either Buyer or Seller
may deliver notice in writing to the other parties hereto setting a Closing Date
in accordance with this Section 2.01 (a "Closing Notice"). The effective date of
the sale of the Acquired Systems shall be at the close of business on the
Closing Date and all prorations and allocations provided for hereunder shall be
made as of the close of business on the Closing Date, except as otherwise agreed
in writing by the parties. Notwithstanding the foregoing, this Agreement may be
terminated pursuant to Section 12 hereof if the Closing has not occurred by
October 31, 1998.
2.02 Purchase Price. Buyer shall acquire and accept the Assets to be
Acquired from Seller and shall pay to Seller the aggregate amount of One Hundred
Ten Million and No/100th Dollars ($110,000,000.00) for the Assets to be Acquired
(the "Purchase Price"), subject to adjustment pursuant to the provisions of
Section 2.06.
2.03 Deposit. Upon execution and delivery of this Agreement by Buyer
and Seller, Buyer shall deliver to Colorado National Bank ("Escrow Agent") the
sum of Seven Million Five Hundred Thousand and No/100th Dollars
($7,500,000.00)(the "Deposit"), to be held in an interest bearing account and
applied pursuant to the terms of that certain Escrow Agreement, dated the date
hereof, by and among Seller, Buyer and Escrow Agent.
2.04 Payment of the Purchase Price. On the Closing Date, Buyer will pay
to Seller, in immediately available funds by wire transfer, an amount equal to
the Purchase Price less the amount of the Deposit which shall be delivered by
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Escrow Agent to Seller at Closing. The Purchase Price shall be further adjusted
at Closing pursuant to the provisions of Section 2.06. At Closing, any interest
which has accrued on the Deposit shall be delivered to Buyer by Escrow Agent.
2.05 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets to be Acquired based upon an appraisal to be obtained
prior to the Closing. The parties agree to engage Kane Reece Associates, Inc.
("KRA") or, if unavailable, The Strategis Group, to prepare such appraisal, and
agree to share equally the costs of the appraisal. The parties shall cause the
appraiser to consult with Buyer and Seller during the preparation of such
appraisal, and the appraiser shall deliver the final appraisal to Buyer and
Seller simultaneously. Buyer and Seller agree to be bound by such allocation and
to file all returns and reports in respect of the transactions herein
contemplated, including all federal, state and local tax returns, on the basis
of such allocation.
2.06 Adjustments to the Purchase Price Prorations.
(a) The Purchase Price shall be: (i) decreased by an amount
equal to the Working Capital Adjustment (as hereinafter defined) to the extent
such Working Capital Adjustment is a negative amount as of the Closing Date; or
(ii) increased by an amount equal to the Working Capital Adjustment to the
extent such Working Capital Adjustment is a positive amount as of the Closing
Date. For purposes hereof, the Working Capital Adjustment shall be the number
obtained by subtracting (x) the sum of the liabilities of Seller (as defined and
determined in accordance with GAAP) on the Closing Date which constitute Assumed
Liabilities, including, but not limited to, Seller's pro rata share of the
liabilities of the Joint Venture, from (y) the sum of the current assets of
Seller (as defined and determined in accordance with GAAP, except that inventory
shall not be included as a current asset) on the Closing Date which are included
within the Assets to be Acquired, including, but not limited to, Seller's pro
rata share of the assets of the Joint Venture, exclusive of inventory. The
Working Capital Adjustment shall be determined in accordance with GAAP.
(b) Without limiting the foregoing, in connection with the
determination of the Working Capital Adjustment:
(i) the amount of service charges of Seller that
have been prepaid by subscribers
shall be a current liability;
(ii) the amount of accrued but unpaid pole rentals of
Seller, if any, shall be a current liability;
(iii) the amount of prepaid pole rentals of Seller
transferred to Buyer, if any, shall be a current asset;
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(iv) the amount of franchise fees of Seller payable
by Buyer after Closing covering periods prior to Closing shall be a
current liability, and the current portion of all other accrued but
unpaid liabilities under all agreements which constitute Assets to be
Acquired shall be current liabilities;
(v) the pro rata share accrued to the Closing Date of
rentals, utility charges, water and sewer charges, municipal garbage
and rubbish removal charges, rents and other customarily proratable
items of Seller (relating to the Assets to Be Acquired) shall be
determined and appropriately credited;
(vi) the amount of all refundable deposits from
subscribers of Seller for converters, encoders, decoders and any
related equipment, and any other prepaid item shall be a current
liability;
(vii) the amount of all prepaid expenses of Seller
which are part of the Assets to be Acquired (except for prepaid
expenses related to the Excluded Assets and any insurance or bonds)
shall be current assets;
(viii) the amount Buyer shall be required to pay, if
any, in order to obtain fee title to all leased vehicles of Seller
which constitute Assets to be Acquired shall be current liabilities;
(ix) the amount of Seller's pro rata share of the
copyright royalty payments to be paid after the Closing Date, as
measured by the number of days during the semi-annual accounting period
during which Seller operated the Acquired Systems divided by the total
number of days in such accounting period, shall be current liabilities;
(x) the amount of any accrued but unpaid real estate
taxes of Seller as of the Closing Date, as determined in accordance
with Section 9 of this Agreement, shall be a current liability;
(xi) all accounts receivable of Seller and/or
Southwest Florida Cable Advertising for services rendered in connection
with the Acquired Systems prior to the Closing Date shall be current
assets except for those accounts receivable which were declared as
uncollectable in accordance with GAAP as reflected on the books and
records of Seller and/or Southwest Florida;
(xii) all accrued overtime, sick pay, vacation pay,
holiday pay or other employee benefits assumed by Buyer for employees
being hired by Buyer pursuant to Section 5.15 shall be current
liabilities; and
(xiii) unpaid development fees, if any, that are due
and payable as of the Closing Date shall be a current liability.
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(c) At least three business days prior to the Closing Date,
Seller shall deliver to Buyer a certificate setting forth a good faith estimated
calculation of the adjustments to the Purchase Price calculated as of the
Closing Date pursuant to subparagraphs (a) and (b) above (the "Estimated
Adjustment"), together with such supporting documentation as the Buyer may
reasonably request. The Estimated Adjustment shall be used to determine the
estimated adjustment to the Purchase Price pursuant to subparagraphs (a) and (b)
above on the Closing Date.
(d) On or before 90 days after the Closing Date, Seller shall
deliver to Buyer a final calculation of the adjustments calculated as of the
Closing Date (the "Final Adjustment"), together with such supporting
documentation as Buyer may reasonably request, which shall evidence in
reasonable detail the nature and extent of each adjustment. Each party shall
cooperate with the other and provide reasonable access to the necessary
personnel and records of the other to review the Final Adjustment. Should Buyer
dispute Seller's Final Adjustment, Buyer shall promptly, but in no event later
than 60 days after receipt of the Final Adjustment (the "Grace Period"), deliver
to Seller written notice describing in reasonable detail the dispute, together
with Buyers determination as to the Final Adjustment in reasonable detail. If
the dispute is not resolved by the parties within 20 days from the date of
receipt by Seller of written notice from Buyer, the parties agree to engage
promptly the Pittsburgh, Pennsylvania office of Price Waterhouse or, if
unavailable, another "big six" accounting firm mutually acceptable to Seller and
Buyer (the "Independent Accountant") to resolve the dispute within 30 days after
such engagement. The Independent Accountant's determination shall be final and
binding on the parties. The Buyer, on the one hand, or Seller, on the other
hand, shall make appropriate payment to the other of the difference between the
Final Adjustment amount and the Estimated Adjustment amount within twenty
business days following either the resolution of the dispute by the parties or
the receipt of the Independent Accountants final determination, as the case may
be; provided, that any amount which is payable based upon the Final Adjustment
delivered by Seller hereunder shall be paid before resolution of the dispute by
the parties or receipt of the Independent Accountant's final determination. All
fees and costs of the Independent Accountant shall be borne pro rata by the
Buyer and by the Seller in proportion to the difference between the Independent
Accountant's determination of the Final Adjustment and each of the Seller's and
the Buyers determination of such adjustment divided by the sum of the two
differences. Buyer shall not dispute Sellers Final Adjustment unless the Buyer's
computation of the Final Adjustment differs from Sellers computation by more
than $25,000. If Buyer fails to notify Seller prior to the expiration of the
Grace Period that it disputes Sellers Final Adjustment, Seller's Final
Adjustment shall be deemed to be accepted by Buyer and shall be final and
binding on the parties.
2.07 Non-Competition Agreement. On the Closing Date, Seller and Jones
shall execute and deliver to Buyer a non-competition agreement, substantially in
the form of Exhibit A (the "Non-Competition Agreement").
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3. REPRESENTATIONS WARRANTIES AND COVENANTS OF SELLER
Seller represents and warrants that the following statements and
representations are true and correct as of the date hereof in addition to which
Seller covenants with Buyer as follows:
3.01 Partnership Standing. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Colorado. Seller has all of the requisite partnership power and authority to own
or lease all of its assets, to own and operate the Acquired Systems owned and
operated by it, to carry on its business as now conducted, to enter into this
Agreement and to perform the terms of this Agreement. Seller is duly qualified
or licensed to do business and is in good standing in the State of Florida.
Jones is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado and has all requisite corporate power
and authority to own all its assets and to carry on its business as now
conducted. Jones is duly qualified and licensed to do business and in good
standing in the State of Florida.
3.02 Authorization.
(a) Except as set forth on Schedule 3.02, the execution and
delivery of this Agreement and of the Seller Transaction Documents by Seller,
the consummation of the transactions contemplated hereby and thereby and
fulfillment of and compliance with the terms and provisions hereof and thereof
do not and will not: (i) violate any provision of any judicial or administrative
order, award, judgment or decree applicable to Seller; (ii) conflict with or
violate any of the provisions of the Limited Partnership Agreement of Seller; or
(iii) conflict with, result in a breach of or constitute a default under any
agreement or instrument to which Seller is a party or by which Seller or any of
its assets is bound, subject to obtaining required consents from, or giving
notices to, third parties. Schedule 3.02 sets forth the name of any governmental
authority or other third party from whom consent must be obtained or to whom
notice must be given in order for Seller to validly and lawfully perform its
obligations hereunder and under the Seller Transaction Documents.
(b) This Agreement has been, and each and every other
agreement, instrument, certificate or other document to which Seller is a party
that is to be executed, delivered and performed by Seller pursuant hereto,
including, without limitation, the Noncompetition Agreements (collectively,
"Seller Transaction Documents"), when executed and delivered by Seller, will
have been, duly authorized, executed and delivered by Seller and constitutes,
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or, when executed and delivered by Seller will constitute, legal, valid and
binding obligations of Seller, enforceable against them in accordance with their
terms.
3.03 Financial Statements. True, complete and correct copies of the
unaudited financial statements of Seller for the three years ended December 31,
1997, December 31, 1996 and December 31, 1995 and true, correct and complete
unaudited financial statements for the month of January, 1998 are attached as
Schedule 3.03. Except as set forth on Schedule 3.03, such financial statements
accurately reflect all of the cash flows, income, expenses, liabilities,
operations, equity and assets of Seller and the Acquired Systems at the
respective dates thereof and the operations of the Acquired Systems as of such
dates. Except as set forth on Schedule 3.03, all of the assets reflected in such
financial statements and all assets acquired by the Seller since the date of
such financial statements are included within the Assets to be Acquired, except
the Excluded Assets and such assets as have been consumed, replaced or sold in
the normal course of business or as have been destroyed by fire, act of God or
other occurrence beyond the control of Seller prior to the date hereof. Except
as set forth on Schedule 3.03, the respective above-referenced financial
statements, including the notes thereto, if any: (a) are in accordance with the
respective books and records of Seller; (b) are true and correct in all material
respects and present fairly the financial condition of Seller as of the dates of
such financial statements and its respective results of operations and cash
flows for the respective periods then ended; and (c) except as indicated in the
notes to such financial statements, have been prepared in accordance with GAAP,
consistently applied with prior periods, and can be reconciled with the
financial records maintained, and the accounting methods applied, by Seller for
tax purposes. Also attached hereto as Schedule 3.03 are (i) true and correct
copies of an accounts receivable aging for the Acquired Systems as of December
31, 1997; and (ii) a true and correct schedule of liabilities of the Seller at
December 31, 1997.
3.04 Title to Assets. Except as set forth on Schedule 3.04 attached
hereto, Seller has good and marketable title to all of the Assets to be
Acquired, free and clear of all mortgages, liens, pledges, security interests,
liens, restrictions, encumbrances or other charges of any nature whatsoever (a
"Lien"), except for the following with respect to real property owned or leased
by Seller: (a) liens for taxes not yet due and payable; (b) easements,
rights-of-way, restrictive covenants and other encumbrances of record; (c)
zoning, subdivision and other similar laws and ordinances; (d) matters which
would be disclosed by an accurate survey of the property; (e) minor
imperfections of title with respect to real property under lease used in the
Acquired Systems which do not interfere with the use of or impair the value of
said property; and (f) except for any Lien not listed on Schedule 3.04 with
respect to which the underlying indebtedness is paid in full and the Lien
removed from the record on or before the Closing Date (collectively, the
"Permitted Liens"). The Assets to be Acquired, whether owned or leased,
constitute all of the assets used in connection with the Acquired Systems as
presently conducted, except for the Excluded Assets.
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3.05 The Acquired Systems.
(a) To the best of Seller's Knowledge, the information as to
the mileage of trunk and feeder plant of the Acquired Systems, the channel
capacity of the Acquired Systems and the dwelling units passed by the Acquired
Systems plant set forth on Schedule 3.05 attached hereto are all true and
correct in all material respects. The Acquired Systems, when loaded with the
number of television channels (picture and sound) indicated on Schedule 3.05
will perform in all material respects to the standards contained in the Rules
and Regulations of the Federal Communications Commission (the "FCC"). As of
January 31, 1998, to the best of Seller's Knowledge, there are approximately 778
miles of energized cable plant, approximately 61,813 residential dwelling units
passed by the Acquired Systems, and approximately 11,985 of bulk units passed by
the Acquired Systems. The Cable Data Report for the Acquired Systems for the
month ended December, 1997, a copy of which is attached hereto as part of
Schedule 3.05 is true, correct and complete in all material respects. Seller has
not itself, nor have any of Seller's officers, directors, partners, affiliates,
agents or employees (except to the extent that payment was made for CATV
services received by them at their own dwelling), paid any of Seller's accounts
receivable from subscribers. Except as set forth on Schedule 3.05, since January
1, 1998, Seller has not changed the channel lineup of the Acquired Systems set
forth on Schedule 3.05; added additional channels to the Acquired Systems;
increased its subscriber rates and services set forth on Schedule 3.05; or
conducted any extraordinary or unusual marketing programs, including any amnesty
programs.
(b)(i) Seller has complied in all material respects with
all notification and reporting
provisions and all other provisions of the FCC rules
and regulations applicable to the Acquired Systems;
the Acquired Systems have been and are being operated
in substantial compliance with the Communications Act
of 1934, as amended, including the amendments
effected by the Cable Communications Policy Act of
1984 (the "1984 Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992
Act") and the Copyright Act of 1976, as amended (the
"Copyright Act"), and with all Rules and Regulations
of the FCC and the U.S. Copyright Office; provided
that Seller does not make any representations about
rates charged to subscribers except as set forth
below. Without limiting the generality of the
foregoing, each of the communities served by the
Acquired Systems has been registered with the FCC;
all of the semi-annual and annual performance tests
on the Acquired Systems described in Section 76.601
of the FCC Rules and Regulations have been made by
Seller; the Acquired Systems currently meet the
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technical standards set forth in the FCC Rules and
Regulations, including the leakage limits contained
in Section 76.605(a)(11); and Seller has delivered to
Buyer a copy of the most recent FCC Forms 320 filed
with the FCC (Basic Signal Leakage Performance
Report) for Seller. Copies of the most recent signal
leakage tests conducted in accordance with Section
76.611 of the FCC Rules and copies of the most recent
"proof of performance" tests on the Acquired Systems
have been delivered to Buyer by Seller (the "Proof of
Performance Tests"). Each of the signal leakage tests
and the Proof of Performance Test was conducted on
the Acquired Systems within the last six (6) months
and in accordance with the testing procedures set
forth in Sections 76.601 and 76.609 of the Rules and
Regulations of the FCC and evidence that the Acquired
Systems meet or exceed all of the technical standards
set forth in Section 76.605 of the Rules and
Regulations of the FCC. The Acquired Systems are
being operated in compliance with the provisions of
Sections 76.610 through 76.619 of the FCC Rules and
Regulations (midband and superband signal carriage);
appropriate authorization from the FCC has been
obtained for the use of all aeronautical frequencies
in use in the Acquired Systems; the Acquired Systems
are presently being operated in compliance with such
authorization; Seller has provided privacy notices to
subscribers of the Acquired Systems in accordance
with the requirements of Section 63(a)(1) of the 1984
Act; and the Acquired Systems are in compliance in
all material respects with the requirements of
Sections 76.92 (Network Non-Duplication Protection)
and 76.151 (Syndicated Program Exclusivity) of the
FCC Rules and Regulations.
(ii) The monthly rates charged by Seller for each service
provided by Seller to subscribers of the Acquired
Systems are set forth on Schedule 3.05. Such rates
were calculated in good faith in accordance with the
FCC Rules and Regulations to comply with the FCC
Rules and Regulations as of the date hereof unless
such rates were not subject to regulation pursuant to
a specific exemption from rate regulation contained
in the Cable Act. Except as provided above, Seller
makes no representations or warranties that rates
charged to subscribers (a) are allowable under any
rules or regulations of the FCC or any authoritative
interpretation thereof; or (b) would be allowable
under any rules or regulations of the FCC or any
authoritative interpretation thereof, promulgated
after the Closing Date. Except as set forth on
Schedule 3.05, Seller has not received
any notice that it has any obligation or liability to
refund any portion of the revenue received by it from
the subscribers of the Acquired Systems.
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(iii) There is no legal action or governmental proceeding
pending or, to Seller's Knowledge, as hereinafter
defined, any investigation or proceeding threatened
(nor any basis therefor of which it is aware) for the
purpose of modifying, revoking, terminating,
suspending, canceling or reforming any of Seller's
FCC licenses or other FCC authorizations or permits,
or which might have a material adverse effect upon,
or cause disruption to, the operation of the Acquired
Systems.
(iv) The Acquired Systems are currently operated and
maintained in all material respects in accordance
with the National Electrical Safety Code and the
terms and conditions of all pole attachment
agreements between Seller and any public utility,
municipality or other authority which has granted
such authorization.
(v) Seller holds all FCC licenses, permits and
authorizations necessary or used in connection with
the operation of the Acquired Systems. Except as set
forth on Schedule 3.05, each such FCC license, permit
and authorization is listed on Schedule 3.05 is in
full force and effect, has been validly issued or
assigned to Seller, accurately lists the current
parameters of the facility licensed and is not
subject to any special conditions or limitations. All
licensed facilities owned or operated by Seller are
being operated in accordance with the operating
parameters of the relevant FCC license.
(vi) Each employment unit operated by Seller, including
any headquarters employment unit has been certified
by the FCC for compliance with the equal employment
opportunity requirements contained in the 1984 Act
for each calendar year from 1991 through 1997 and any
subsequent periods prior to the Closing Date.
(vii) All broadcast television signals carried on the
Acquired Systems are being carried in accordance with
the requirements of the Communications Act of 1934,
as amended, and FCC regulations promulgated
thereunder. Seller has entered into a retransmission
consent agreement with each broadcaster of television
signals so identified on Schedule 3.05. Seller is
carrying, pursuant to a "must-carry" request, each
broadcaster of television signals so identified on
Schedule 3.05 Seller has not received any notice that
any broadcaster of television signals has complained
regarding its channel positioning.
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(c) The Acquired Systems are in material compliance with
respect to all notices, filings and payments of copyright fees required by
Section III of the Copyright Act and the United States Copyright Office
regulations. The copyright fees shown to be due on all Statements of Account (as
amended by any required filings and/or any other corrective supplements) have
been calculated in accordance with the regulations of the United States
Copyright Office issued pursuant to the Copyright Act. Except as set forth on
Schedule 3.05, Seller has not received any notices from the United States
Copyright Office, or any other person or entity either questioning any copyright
filing or payment, or the failure to make any copyright filing or payment, or
threatening to bring suit for copyright infringement which have not been settled
and resolved.
(d) The Acquired Systems are being operated in compliance with
the Rules and Regulations of the Federal Aviation Administration ("FAA").
Schedule 3.05 lists all of the existing towers of the Acquired Systems. Without
limiting the generality of the foregoing, the existing towers of the Acquired
Systems are obstruction marked and lighted in accordance with the Rules and
Regulations of the FAA and FCC or are exempt from such requirements. All
required authorizations, including, but not limited to, Hazard to Air Navigation
determinations, for such towers have been issued by and pursuant to the Rules
and Regulations of the FAA. Except as set forth on Schedule 3.05, Seller does
not lease space on such towers to any third party. Copies of all FAA documents
and correspondence relating to such towers have been delivered to Buyer.
(e) Except as set forth in Schedule 3.05, and except for
customer claims (other than those on Form 329, which are listed on Schedule 3.05
arising in the ordinary course of business, none of which, individually or in
the aggregate, are material), there are no claims pending or, to the best of
Seller's Knowledge, threatened against Seller with respect to the operation of
the Acquired Systems.
(f) Except as set forth on Schedule 3.05, there are no
unfulfilled promises or commitments for capital improvements, whether or not
legally binding, which Seller has made to third parties in connection with the
Acquired Systems. Seller has described in Schedule 3.05 all construction and
improvement programs in progress. Except as set forth on Schedule 3.05, there
are no obligations or liabilities to subscribers or to other users of Seller's
CATV services which are material to the business of the Acquired Systems,
except: (i) with respect to deposits made by such subscribers or such other
users; and (ii) the obligation to supply services to subscribers in the ordinary
course of business pursuant to the Franchises. No default exists in respect of
any provisions of any Franchise governing relations with subscribers or other
users of Seller's CATV services, and no notice of any such default has been
received by Seller. Except as set forth on Schedule 3.05, to Seller's Knowledge,
no complaints have been made by subscribers or other users of Seller's CATV
services that, individually or in the aggregate, could have a material adverse
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effect upon the Assets to be Acquired or the financial condition or operation of
the Acquired Systems.
(g) The Acquired Systems are in compliance in all material
respects with engineering standards generally accepted in the CATV industry.
(h) Except as set forth on Schedule 3.05, there is no free
service liability to subscribers existing with respect to the Acquired Systems.
Except with respect to deposits for converters, encoders, decoders and related
equipment, and any other prepaid income item which Buyer is to receive a credit
for pursuant to Section 2.06 and except as set forth on Schedule 3.05, to
Seller's Knowledge, Seller has no obligation or liability for the refund of
monies to its subscribers.
(i) Except as set forth on Schedule 3.05, with respect to the
Acquired Systems, Seller has not made a commitment to any franchising authority
to maintain a local office in any location. Further, Seller has not made any
commitment to any of the municipalities served by the Acquired Systems to pay
franchise fees to any such municipality in excess of the amounts set forth on
Schedule 3.05.
(j) Except as described on Schedule 3.04, and other than
satellite master antenna television services, multichannel multipoint
distribution services and direct broadcast satellite services, as of the date of
this Agreement, (i) the System is the only multiple channel operator presently
serving the communities which it serves, (ii) to Seller's Knowledge, no other
multiple channel operator is presently contemplated by any Person in the
communities now served by the System, and (iii) no franchises or other
authorizations other than the Franchises have been issued with respect to the
communities served by the System.
3.06 Franchises.
(a) Listed and identified on Schedule 3.06 attached hereto are
all of the existing governmental authorizations for maintenance and operation of
the Acquired Systems (individually, a "Franchise" and collectively, the
"Franchises") presently held by Seller, and the political entity or authority
which has granted each Franchise. All governmental authorizations necessary or
required for the construction, maintenance and operation of the Acquired Systems
have been obtained by Seller, as the case may be. To the best of Seller's
Knowledge, all such agreements, statutes, ordinances, resolutions, licenses or
permits granting the Franchises are validly existing, legally enforceable
obligations of Seller and are validly existing, legally enforceable obligations
of the other parties thereto, in accordance with their terms, and that the same
have been granted and renewed in accordance with all applicable federal, state
and local laws, and Seller is validly and lawfully operating the Acquired
Systems under the Franchises and applicable law. Further, Seller has obtained in
accordance with all federal, state and local laws all Franchises required for
the lawful operation of the Acquired Systems. Except as set forth on Schedule
3.06, none of the political entities or authorities which have granted a
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Franchise have been, or have applied to be, certified to regulate the CATV rates
charged by Seller pursuant to the 1992 Act and the FCC Rules and Regulations.
Each of the Franchises expires on the dates set forth on Schedule 3.06
attached hereto. Except as set forth on Schedule 3.06, Seller has duly complied
in all material respects with all of the terms and conditions of the Franchises
and has not done or performed any act which would invalidate its rights under,
or give to the granting authority the right to terminate, the Franchises. There
is no pending assertion or claim that operations pursuant to any Franchise have
been improperly conducted or maintained, or, to Seller's Knowledge, any facts or
circumstances that might give rise to any such assertion or claim. Except as set
forth on Schedule 3.06, all construction of distribution plant required by any
of the Franchises has been completed in accordance with the terms of such
Franchises.
(b) True, complete and correct copies of the Franchises, all
amendments, assignments and consents thereto and the latest rate change
approval, if any, to the date hereof have been delivered by Seller to Buyer.
3.07 Pole Attachment Agreements.
(a) Listed on Schedule 3.07 are all of the pole attachment
authorizations and agreements (individually, a "Pole Attachment Agreement," and
collectively, the "Pole Attachment Agreements") presently held by Seller and the
public utility, municipality or other authority which has granted such
authorizations. True, complete and correct copies of each of the agreements,
ordinances, resolutions, licenses or permits granting the Pole Attachment
Agreements and all amendments, assignments and consents thereto have been
furnished by Seller to Buyer. Seller has duly complied in all material respects
with all of the terms and conditions of the Pole Attachment Agreements to which
it is a party and has not done or performed any act which would invalidate its
rights under the Pole Attachment Agreements. There is no pending assertion or
claim against Seller that operations pursuant to any Pole Attachment Agreement
have been improperly conducted or maintained or, to Seller's Knowledge, no facts
or circumstances that might give rise to any such assertion or claim. Schedule
3.07 lists and describes the results of any audits or investigations conducted
by any of the parties to the Pole Attachment Agreements during the previous
three (3) years.
(b) All poles shown on Schedule 3.07 are contacted under valid
permit under and in accordance with the terms of the Pole Attachment Agreements.
All fees due and payable under the Pole Attachment Agreements have been paid. A
true, correct and complete copy of the most recent invoice from each utility or
other entity with whom Seller has entered into a Pole Attachment Agreement has
been delivered by Seller to Buyer.
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(c) There is no claim or action pending or, to Seller's
Knowledge, threatened, against Seller by any public utility, municipality or
other authority which has granted a Pole Attachment Agreement, or by any third
party. All rearrangement work on the poles and/or all pole changeout work
requested of Seller prior to the date hereof by any grantor of a Pole Attachment
Agreement or required under any Pole Attachment Agreement has been completed or,
if in progress, will be completed by the Closing Date, or if not completed, an
adequate reserve has been accrued therefor by the Seller.
(d) The location of each utility pole owned by Seller is set
forth on Schedule 3.07.
3.08 Head-end Sites and Office Locations.
(a) All of the real property owned by Seller is described on
Schedule 3.08 attached hereto. Except as otherwise described on Schedule 3.01,
Seller has fee simple title to all such real property, free and clear of all
mortgages, claims, security interests, liens or encumbrances of any kind, except
for the Permitted Liens and minor exceptions to title which do not affect the
use of the property in the Acquired Systems. A copy of the deed pursuant to
which Seller acquired such real property and any title insurance policies
related thereto, if any, have been furnished by Seller to Buyer.
(b) All leases and rights-of-way used in the Acquired Systems
are listed on Schedule 3.08 (the "Leases and Rights-of-Way"). Except as set
forth on Schedule 3.08, Seller has a valid and subsisting lease for and
leasehold interest in and right-of-way to all of the real property not owned by
Seller and used by Seller as head-end sites or office locations for the Acquired
Systems. Except as set forth on Schedule 3.08, as allowed by federal law, or
where the failure to do so would not have a material adverse effect on the
Assets to be Acquired taken as a whole, Seller has a valid and subsisting
right-of-way agreement, whether public or private, for all of the real property
crossed by its CATV plant. Except as disclosed on Schedule 3.08 attached hereto,
all such leases and rights-of-way are fully assignable by Seller. Except as
disclosed on Schedule 3.08, all written leases or memoranda of leases with
respect to headend or office sites are in recordable form. True, correct and
complete copies of each of such leases, written rights-of-way, all amendments,
assignments and consents thereto have been furnished by Seller to Buyer, and
each of such leases and rights-of-way is described on Schedule 3.08 attached
hereto. Seller has duly complied in all material respects with all of the terms
and conditions of such leases and rights-of-way and has not done or performed or
failed to perform any act which would allow for the termination of its rights
under such leases or rights-of-way.
3.09 Other Contracts and Leases. Schedule 3.09 lists each existing
contract, agreement, lease, permit, consent, license, microwave agreement or
commitment, including pole line agreements, whether written or oral, affecting
or relating to the Acquired Systems (the "Agreements") other than the Excluded
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Assets; the Franchises; the Pole Attachment Agreements; the Leases and
Rights-of-Way; subscription agreements with individual residential subscribers
for the cable services provided in the ordinary course of business, agreements
which may be canceled by Seller without penalty on not more than 30 days notice;
miscellaneous service contracts terminable at will without penalty; other
contracts or agreements relating to the Acquired Systems not involving either
aggregate liabilities under all such agreements exceeding $25,000 or any
material nonmonetary obligation; and programming agreements. Each of the
Agreements is in full force and effect in accordance with its terms. Without
limiting the foregoing, the Acquired Systems, and all equipment and real
property used in connection therewith, are now being utilized, operated and
maintained in conformity in all material respects with the provisions of the
Agreements. Seller has not in any manner failed to so utilize, operate and
maintain the Acquired Systems in a manner which could now or hereafter result in
cancellation or termination of, or liability for damages under, the Agreements,
nor is Seller in default in any material respect in the performance of one or
more of its obligations pursuant to the Agreements.
3.10 Agreements with Employees.
(a) Except as set forth on Schedule 3. 10, Seller is not a
party to any employment agreement, written or oral, which cannot be terminated
at will by Seller, and, except as set forth on Schedule 3.10, Seller does not
currently have any pension or profit sharing or other employee benefit plan for
its employees. True, correct and complete copies of all agreements and
descriptions of the plans listed on Schedule 3. 10 hereto have heretofore been
delivered by Seller to Buyer.
(b) The titles and rates of compensation of all of the
employees of Seller are listed on Schedule 3.10.
(c) Seller's policy with respect to the amount of vacation
time earned by employees is set forth on Schedule 3.10.
3.11 Litigation or Judgments. Except as set forth on Schedule 3.11 to
this Agreement, there is no litigation, at law or in equity, or any proceedings
before any commission, agency or other governmental authority, pending or, to
Seller's Knowledge, threatened against Seller or the Acquired Systems, and, to
Seller's Knowledge, no facts or circumstances exist which could reasonably be
expected to give rise to any such litigation or proceedings.
3.12 Tax Returns and Payments. With respect to the Acquired Systems,
Seller has timely and properly filed or caused to be filed all tax returns which
it is or has been required to file on or prior to the date hereof by any
jurisdiction to which it is or has been subject, all such tax returns being
true, correct and complete in all material respects. All income, unemployment,
social security, franchise, property and other taxes levied, assessed or imposed
upon Seller or the Acquired Systems by the United States, or any state, or
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governmental sub-division of either, to the extent due and payable and not
contested by Seller, have been timely and properly paid to date, and no
liability exists for deficiencies. Except as set forth on Schedule 3.12 attached
hereto, there are no tax audits pending nor any outstanding agreements or
waivers extending the statutory period of limitations applicable to any federal,
state or local income tax return of Seller for any period. Except as set forth
on Schedule 3.12, to Sellers Knowledge, no tax deficiencies have been
determined, nor proposed tax assessments charged, against Seller (nor is there
any reasonable basis therefor). Seller has made or caused to be made all
withholdings of taxes required to be made, and such withholdings have either
been paid to the appropriate governmental agency or set aside in appropriate
accounts for such purpose. True, correct and complete copies of the federal,
state and local tax returns of Seller for the Acquired Systems for all income,
gross receipts, franchise and property taxes for the last three (3) fiscal years
have been delivered to Buyer.
3.13 Compliance with Laws. Seller is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules,
regulations, orders, writs, injunctions, ordinances or decrees of any governing
authority, federal, state or local court, or of any municipal or governmental
department, commission, board, bureau, agency or municipality having
jurisdiction over it or the Acquired Systems.
3.14 Adverse Developments. Since October 1, 1997, (i) no material
adverse change has occurred with respect to the Acquired Systems or their
financial conditions or operations, taken as a whole, other than changes arising
from (a) matters of a general economic nature or any change affecting the United
States cable industry as a whole; (b) matters caused by or arising from
legislation, rulemaking or regulation affecting the cable industry in general;
or (c) competition caused by or arising from other multiple channel distribution
services; and (ii) there has been no material damage, destruction, loss or other
casualty to the Assets to be Acquired, taken as a whole, that has not been
repaired or replaced.
3.15 Condition of Assets to be Acquired and Insurance. The Acquired
Systems, both as integrated systems and in their respective component parts, are
operated and maintained in a proper manner; to Seller's Knowledge, are free from
any material (either individually or in the aggregate) defects of workmanship or
material in light of its age and the use to which it has been put; and meet in
all material respects the requirements of: (i) the Franchises, (ii) the Pole
Attachment Agreements, (iii) the Agreements, and (iv) all applicable technical
standards, rules, regulations and orders of federal, state and local governing
or regulatory authorities. The Assets to be Acquired are all in good operating
condition, reasonable wear and tear excepted. None of the cable used in the
Acquired Systems requires any rearrangement or rehabilitation other than routine
system maintenance. The Assets to be Acquired include such spare parts as are
necessary in order to permit the operation of the Acquired Systems without
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material interruption for a thirty-day period. Except as set forth on Schedule
3.15, the Assets to be Acquired are and have been insured, and all such
insurance policies are in full force and effect, are on an "occurrence" basis,
and are in terms and scope and amounts which are customary in accordance with
industry standards for CATV systems of comparable size. Seller has not received
any notice of cancellation with respect to such policies. During the past three
(3) years, no application by Seller for insurance with respect to the Assets to
be Acquired has been denied for any reason. Seller has provided Buyer with
copies of the loss claims history of Seller for the past three (3) years.
3.16 Patents, Trademarks and Copyrights. The operation of the Acquired
Systems by Seller does not infringe upon, or otherwise violate, the rights of
any person or entity in any copyright, trade name, trademark right, service
mark, service name, patent, patent right, license, trade secret or franchise,
and there is not pending or, to Seller's Knowledge, threatened any action with
respect to any such infringement or breach.
3.17 Labor Relations. Except as set forth on Schedule 3. 11, the
employees of Seller are not parties to any collective bargaining agreement. This
Agreement and the transactions contemplated hereunder shall not obligate Buyer
to recognize any union or to assume any collective bargaining agreement that
applies to Seller's employees. Except as set forth on Schedule 3.17, There
currently are not, nor in the past five years have there been, any grievances,
unfair labor practice claims, disputes or controversies with any union, or
threats of strikes, work stoppages or any pending demands for collective
bargaining by any union. Seller has received no notice of any grievances, unfair
labor practice claims, disputes or controversies with any other organization of
Seller's employees, or threats of strikes, work stoppages or any pending demands
for collective bargaining by any such organization.
3.18 Restoration. Other than in the ordinary course of business, no
material restoration, repaving, repair or other work is required to be made by
Seller to any street, sidewalk or abutting or adjacent area pursuant to the
requirements of any ordinance, code, permit, easement or contract relating to
the installation, construction or operation of the Acquired Systems. Except with
respect to the installation of cable lines and facilities in the ordinary course
of business, no property of any person or entity has been damaged, destroyed,
disturbed or removed in the process of construction-or maintenance of the
Acquired Systems which has not been, or will not be, prior to Closing, repaired,
restored or replaced, or, if not repaired, restored or replaced, for which an
adequate reserve has not been accrued by the Seller prior to Closing.
3.19 Bulk Sales Compliance. Seller shall comply, in connection with the
sale and transfer of the Assets to be Acquired pursuant to this Agreement, with
any applicable law pertaining to bulk sales or transfers.
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3.20 Right of First Refusal. Except as set forth on Schedule 3.20, no
person or entity has any option, warrant or right of first refusal to purchase
either the Acquired Systems or any of the Assets to be Acquired.
3.21 Environmental Matters. Except as set forth on Schedule 3.21,
Seller has complied and is in compliance in all material respects with all
applicable federal, state and local laws, regulations and ordinances relating to
protection of human health and the environment ("Environmental Laws"), including
those related to hazardous substances, wastes, discharges, emissions, disposals,
dumping, burial or other forms of disposal, as defined by the Environmental
Laws. Except as set forth on Schedule 3.21, there are no current or pending
claims, administrative proceedings, judgments, declarations or orders relating
to violations of Environmental Laws or to the presence of Hazardous Substances
(as defined by the Environmental Laws) on, in or under the owned or leased real
property of Seller. No hazardous waste has been dumped, buried, discharged or
disposed of on, in or under the owned or leased real property of Seller by
Seller in violation of any Environmental Laws or, to the best Knowledge of
Seller, by any other person or entity. Except as set forth on Schedule 3.21,
neither Seller nor, to the Knowledge of Seller, any third party has installed or
placed on, under or in the owned real property or the leased real property of
Seller: (i) any treatment, storage, recycling or disposal facility for any
hazardous waste as that term is defined under 40 CFR Part 261 or any state
equivalent; (ii) any underground storage tanks, in use or abandoned; or (iii)
any polychlorinated biphenyls (PCBs) in any hydraulic oils, transformers,
capacitors or other electrical equipment.
3.22 Equivalent Basic Subscribers; Gross Revenues. At the conclusion of
the 1997 calendar year, the Acquired Systems had 46,450 "Equivalent Basic
Subscribers." For the year 1997, the Acquired Systems had approximately
$19,234,640.00 in gross revenues. For the purposes of this Agreement, the term
"Equivalent Basic Subscriber" shall mean the number obtained by adding (i) the
number of first outlet residential subscribers for basic CATV service of the
Acquired Systems who have made at least one monthly payment for service at the
normal monthly rate for basic service and whose accounts are not more than sixty
(60) days past due from the first day of the month for which service was
rendered (ii) the result obtained by dividing the aggregate of the gross monthly
billing for limited basic, tier 1 and tier 2 services (excluding installation,
connection, relocation and disconnection fees and miscellaneous rental charges
for equipment such as remote control devices and converters) from business and
commercial accounts, residential bulk units, hotels/motels and other commercial
establishments who have made at least one monthly payment for service at the
normal monthly rate and whose accounts are not more than sixty (60) days past
due from the first day of the month for which such service was rendered, by
$28.60, which represents the average monthly service charge in effect for a
first outlet residential connection for expanded basic CATV service.
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3.23 HSR Act Filing. Seller shall cooperate reasonably with Buyer and,
to the extent required, shall file or cause to be filed with the Federal Trade
Commission ("FTC") and the Department of Justice ("DOJ") within thirty (30) days
after the date hereof a notification and report on behalf of Seller, completed
in accordance with applicable law and regulations, with respect to the
transactions contemplated hereby, pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules promulgated
thereunder. Seller agrees to use commercially reasonable efforts to comply with
any additional requests for information, whether formal or informal, under the
HSR Act; provided, however, that, notwithstanding such efforts, if the FTC or
the DOJ has not certified as complete each party's compliance with a formal
second request under the HSR Act by the Termination Date, then Seller may
terminate this Agreement without further obligation hereunder.
3.24 Disclosure. No representation or warranty by Seller in this
Agreement or any Schedule or Exhibit, or any statement, list or certificate
furnished or to be furnished by Seller pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading or necessary in order to provide a prospective purchaser
of the Acquired Systems with proper material information as to the Assets to be
Acquired and the business of Seller.
3.25 Media One Facilities Agreement. Seller has been negotiating the
terms of a Facilities Agreement with Colony Communications, Inc., d/b/a MediaOne
(the "Facilities Agreement"). A copy of the latest draft of the Facilities
Agreement is attached hereto as Schedule 3.25. Seller represents and warrants
that the Facilities Agreement has not been executed by Seller.
For the purposes of the representations and warranties made by Buyer
and Seller hereunder, the term "Knowledge," with respect to any matter, shall
mean the actual awareness or knowledge of such person (if a natural person) or
any of the officers or general manager of the Acquired Systems (if not a natural
person), as opposed to implied or institutional knowledge, but without any duty
of investigation or inquiry.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. Buyer represents and
warrants that the following representations and warranties are true and correct
as of the date hereof and will also be true and correct on the Closing Date, in
addition to which it covenants with Seller that:
4.01 Status, Power and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to own and lease its
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properties and to conduct its business as currently conducted and to acquire the
Assets to be Acquired.
4.02 Authorization of Agreement.
(a) Buyer has taken all necessary action to authorize and
approve this Agreement, the consummation of the transactions contemplated hereby
and the performance by Buyer of all of the terms and conditions hereof on the
part of Buyer to be performed. The execution and delivery by Buyer of this
Agreement and each and every other agreement, instrument, certificate or
document to which Buyer is a party that is to be executed, delivered and
performed by Buyer pursuant thereto (collectively, "Buyer Transaction
Documents"), and the consummation of the transactions contemplated hereby and
thereby, do not and will not: (i) violate any provisions of any judicial or
administrative order, award, judgment or decree applicable to Buyer, or (ii)
conflict with any of the provisions of the charter documents of Buyer, or (iii)
conflict with, result in a breach of or constitute a default under any material
agreement or instrument to which Buyer is a party or by which it is bound.
(b) This Agreement and the Buyer Transaction Documents, when
executed and delivered by Buyer, will have been duly authorized, executed and
delivered by Buyer, and this Agreement constitutes, and the Buyer Transaction
Documents, when executed and delivered by Buyer, will constitute, legal, valid
and binding obligations of Buyer, enforceable against Buyer in accordance with
their respective terms.
4.03 Litigation. There is no litigation, at law or in equity, or any
proceedings before any commission or other governmental authority, pending or,
to the knowledge of Buyer, after due inquiry, threatened against Buyer which
could reasonably be expected to impair the ability of Buyer to consummate the
transactions contemplated by this Agreement.
4.04 HSR Act Filing. Buyer shall, to the extent required, file or cause
to be filed with the FTC and the DOJ within thirty (30) days after the date
hereof a notification and report form on behalf of Buyer, completed in
accordance with applicable law and regulations, with respect to the transactions
contemplated hereby, pursuant to the HSR Act and the rules promulgated
thereunder. Buyer agrees to use commercially reasonable efforts to comply with
any additional requests for information, whether formal or informal, under the
HSR Act; provided, however, that, notwithstanding such efforts, if the FTC or
the DOJ has not certified as complete each party's compliance with a formal
second request under the HSR Act by the Termination Date, then Buyer may
terminate this Agreement without further obligation hereunder.
4.05 Consummation of Agreement. Buyer shall use commercially reasonable
efforts to perform and fulfill all obligations and conditions on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
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5. CONDUCT OF BUSINESS OF ACQUIRED SYSTEMS PENDING CLOSING AND ADDITIONAL
COVENANTS OF SELLER. Seller covenants and agrees with Buyer that from the date
hereof to and including the Closing Date:
5.01 Maintenance of Business. Seller shall continue to operate the
Acquired Systems, shall maintain the Assets to be Acquired (including the
maintaining of a level of inventory of spare equipment and parts in a manner
consistent with past practices) and shall keep all of its business books,
records and files, all in the ordinary course of business in accordance with
past practices consistently applied and in accordance with the capital budget
and operating budget delivered by Seller to Buyer. Seller shall not sell,
transfer or assign any assets except in the ordinary course of business and for
fair market value. Seller shall not permit the creation of any lien, charge or
encumbrance on any of its assets that would survive the Closing other than the
lien of current taxes not yet due and payable. Seller shall not initiate or
otherwise cause any other person to initiate any action to amend or cancel, nor
permit any other person to take any action to amend or cancel, any of the
Franchises, the Pole Attachment Agreements or the Agreements without the prior
written consent of Buyer. Promptly after becoming aware thereof, Seller shall
notify Buyer of any action taken or proposed to be taken by a person other than
Seller to amend or cancel any of the Franchises, the Pole Attachment Agreements
or the Agreements. Seller shall not enter into any contract or commitment nor
incur any indebtedness or other liability or obligation of any kind relating to
the Acquired Systems which is not in the ordinary course of business in
accordance with past practices without the prior written consent of Buyer.
Seller shall not permit any of its partners, officers, directors, shareholders,
agents, employees or affiliates to pay any of Seller's accounts receivable from
subscribers outstanding on the date hereof. Notwithstanding the foregoing, such
persons shall be permitted to make payment for CATV services received by them at
their own dwellings. Without the prior written consent of Buyer, which consent
shall not be unreasonably withheld, delayed or conditioned, Seller shall not,
except as otherwise required by law: change the channel lineup of the Acquired
Systems; add additional channels to the Acquired Systems, except for channels
added at the request of a franchising authority as part of the process of
renewing a Franchise (in which event, Seller shall give Buyer written notice of
the addition of such channels); change its subscriber rates other than in the
ordinary course of business (provided, however, that if Seller is required to
change its subscriber rates pursuant to a regulatory order, Seller may do so
without the consent of Buyer upon 30 days' prior written notice); or conduct any
extraordinary or unusual marketing or collection programs, including, without
limitation, any amnesty programs, or any extraordinary collection practices
which might adversely affect customer relationships. Seller shall increase its
subscriber rates in the ordinary course of business consistent with past
practice and with the prior written approval of Buyer, not to be unreasonably
withheld. Seller shall comply with all laws, rules and regulations of federal,
state, city and local governments. Seller shall not violate the terms of any
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lease or contract connected with the operation of the Acquired Systems or with
the utilization of the Assets to be Acquired. Seller shall not grant any
increase in the rate of wages, salaries, bonuses or other remuneration of any
employee, except in accordance with past practices, and provided that Seller may
incent employees to remain employees of the Acquired Systems through the Closing
Date without violating this covenant.
5.02 Insurance. Seller shall use commercially reasonable efforts to
maintain in full force and effect until Closing all existing insurance policies
to cover and protect the Assets to be Acquired against damage or destruction.
5.03 Organization. Seller shall use commercially reasonable efforts
consistent with sound business judgment to preserve intact its present business
and organization, to retain the services of its present employees, to preserve
its relationships with subscribers, suppliers and others having business
relationships with it and to maintain the goodwill enjoyed within the
municipalities serviced by the Acquired Systems.
5.04 Access for Investigation. Seller shall afford Buyer and its
representatives access during normal business hours to the properties, plant and
equipment and to the books and records of Seller in order that Buyer shall have
full opportunity to investigate the business affairs of Seller.
5.05 Notice.
(a) Promptly upon Seller becoming aware of the occurrence of,
or the impending or threatened occurrence of, any event which would cause any of
the representations or warranties of Seller contained herein, or in any Schedule
or Exhibit, to be inaccurate in any material respect, Seller shall give detailed
written notice thereof to Buyer and shall use commercially reasonable efforts to
prevent or promptly remedy the same.
(b) Seller shall refrain from knowingly taking, and shall use
commercially reasonable efforts to refrain from knowingly suffering or
permitting, any action which would render untrue any of the representations or
warranties of Seller contained herein, and Seller shall not knowingly omit to
take any action reasonably required to maintain the goodwill enjoyed within the
municipalities serviced by the Acquired Systems in the ordinary course of
business, consistent with past practice.
5.06 Consummation of Agreement. Seller shall use commercially
reasonable efforts to perform and fulfill all obligations and conditions on its
part to be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be fully carried out.
5.07 Cooperation with Buyer. Seller shall cooperate, to the extent not
inconsistent with its obligations hereunder, as Buyer may reasonably request, in
apprising the municipalities serviced by the Acquired Systems and the utility
companies which have issued the Pole Attachment Agreements of the sale of the
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Acquired Systems to Buyer in such manner as to preserve the goodwill of such
municipalities and utility companies.
5.08 Accounts List. Prior to the Closing Date, Seller shall deliver to
Buyer a list of all persons to whom Seller makes recurring periodic payments in
connection with the business and operations of the Acquired Systems (the
"Accounts List"), except for persons to whom Seller makes recurring periodic
payments in connection with any Excluded Asset. Each individual entry set forth
on the Accounts List shall list the name and address of each account creditor
and the approximate average amount and approximate frequency of the recurring
periodic payments paid to each such account creditor. Seller shall use its
reasonable efforts to ensure the accuracy and completeness of the Accounts List.
5.09 FCC Approval. Seller shall make application to the FCC for the
consent and approval of the FCC to the transfer of the ownership and operation
of any FCC licenses of the Acquired Systems from Seller to Buyer, to the extent
such consent and approval is required to be obtained.
5.10 Certificates. On or before the Closing Date, Jones shall deliver
to Buyer: Certificates of Good Standing issued by the Secretary of State of
Colorado as to Jones's good standing in such state and a Certificate of Good
Standing from the State of Florida.
5.11 Third-Party Consents. Except for fees relating to filings required
by the Hart-Scott-Rodino Antitrust Improvements Act, the costs of which shall be
shared equally by Buyer and Seller, Seller shall, at its sole cost and expense,
use commercially reasonable efforts to obtain prior to Closing all consents and
approvals from third parties which are identified on Schedule 3.02 (including a
provision permitting the subsequent assignment by Buyer to any affiliate of
Buyer); provided, however, that the costs and expenses associated with the
performance after the Closing Date of obligations which are required by a third
party as a condition of granting its consent or approval and which obligations
are accepted by the Buyer shall be borne solely by the Buyer. All such consents
shall be in writing and in form and substance reasonably satisfactory to Buyer.
In the event that Buyer's cooperation is required to obtain such consents, Buyer
shall reasonably cooperate with Seller and shall be responsible for its own
out-of-pocket costs in connection therewith. If a third party refuses to include
a provision allowing the subsequent assignment by' Buyer to its affiliates,
Seller will notify Buyer and Buyer may discuss such refusal with the third
party.
5.12 Approval of Franchise Authorities. Seller shall use its
commercially reasonable efforts to obtain the consent of the applicable
franchisors to the transfer to Buyer (and subsequently by Buyer to its
affiliates) of all of the Franchises. Seller shall use commercially reasonable
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efforts to obtain a certificate from each franchisor certifying that: (a) the
Franchise was properly granted; (b) the Franchise was properly extended (if
applicable); (c) the Franchise is validly existing and in full force and effect;
(d) there exists no fact or circumstance which, with the passage of time or the
giving of notice or both, would constitute a default under the Franchise, or
permit the franchisor to cancel or terminate the rights thereunder, except upon
the expiration of the full term thereof; (e) the Franchise may be collaterally
assigned to Buyer's lenders. Buyer shall reasonably cooperate with Seller in
Seller's efforts to secure such approvals and consents, including attending such
meetings and providing such information with respect to Buyer as the franchisors
may reasonably request. Buyer shall post any bond or other security reasonably
required pursuant to the terms of such approvals and consents.
5.13 FCC and Other Regulatory Compliance. Seller shall consult with
Buyer prior to implementing any subscriber rate changes relating to the
implementation of any FCC regulations, except as otherwise provided in Section
5.01 hereof.
5.14 Approval of Lessors. Seller shall use its commercially reasonable
efforts to obtain the consent of each lessor of real property relating to the
Acquired Systems listed on Schedule 3.02 as being required to consent to the
assignment to Buyer of any lease. Seller shall use its commercially reasonable
efforts to obtain a certificate from the lessor under each lease for real
property relating to the Acquired Systems to which Seller is a party and which
is listed on Schedule 3.01 certifying that: (a) the lease is validly existing
and in full force and effect; and (b) all payments under the lease due and
payable prior to the date of such certificate have been paid in full.
5.15 Employees. Seller shall terminate all of its employees immediately
prior to Closing. Seller shall remain solely responsible for any termination
benefits to which any of the employees is entitled by reason of such termination
whether or not such person is subsequently employed by Buyer. Buyer shall have
no obligation to offer employment to any of the employees of Seller. Buyer shall
notify Seller at least 60 days after the date of this Agreement, or 30 days
prior to Closing, whichever is earlier, of those employees to whom Buyer intends
to offer employment. Buyer agrees to offer such employees credit for accrued
overtime, sick pay, vacation pay, holiday pay and other employee benefits to the
extent Buyer offers equivalent benefits to its existing employees and to the
extent the foregoing are included as current liabilities under Section 2.05(a)
hereof. Seller shall refrain from making any statements or communications to its
employees regarding subsequent employment by Buyer or Buyers employment policies
without Buyer's prior written consent.
5.16 Transitional Billing Services. Seller shall provide to Buyer, upon
request, access to and the right to use its billing system computers, software
and related fixed assets in connection with the Acquired Systems for a period of
up to 90 days following the Closing Date to allow for conversion of existing
billing arrangements ("Transitional Billing Services"). Buyer shall notify
Seller at least 60 days after the date of this Agreement as to whether it
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desires Transitional Billing Services. Transitional Billing Services, if any,
that are requested by Buyer shall be provided on terms and conditions reasonably
satisfactory to Seller; provided, however, that the amount to be paid by Buyer
for such Transitional Billing Services shall not exceed the reasonable direct
incremental cost to Seller of providing such Transitional Billing Services.
5.17 Financial Statements. Seller shall provide Buyer with copies of
all regularly prepared monthly financial statements relating to the Acquired
Systems promptly after the same become available in the ordinary course.
5.18 Facilities Agreement. Seller shall not execute the Facilities
Agreement without the prior written consent of Buyer, which consent shall not be
unreasonably withheld. Seller shall not withhold its consent to Seller's
execution of the Facilities Agreement if: (a) the Facilities Agreement is not
modified from the form attached hereto as Schedule 3.25 except as set forth
below; and (b) the Facilities Agreement: (i) prohibits MediaOne from splicing
into the fiber covered by the proposed Facilities Agreement with the exception
of splices at the end points of the fiber run; (ii) has a maximum term of two
(2) years; and (c) the Facilities Agreement does not authorize further build-out
of additional dark fiber facilities on the System by MediaOne; provided,
however, that Buyer shall have the right to review and approve the language to
the Facilities Agreement effectuating the changes contemplated by subparagraphs
(b) and (c) above. In the event that Seller executes the Facilities Agreement in
accordance with the provisions hereof, Buyer shall assume Seller's rights and
obligations under the Facilities Agreement arising after the Closing Date.
Seller reserves the right not to enter into the Facilities Agreement and/or to
terminate its existing arrangement with MediaOne at any time. Except for routine
maintenance and construction, Seller covenants and agrees that it will not at
any time after the date hereof commit to any build-out of the facilities to be
transferred to Buyer for the benefit of any third party without the prior
written consent of Buyer.
6. CONDITIONS TO CLOSING - BUYER.
6.01 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the purchase of the Assets to be Acquired at Closing shall be subject
to the satisfaction of the following conditions precedent, except to the extent
waived by Buyer in writing:
(a) All of the representations and warranties of the Seller
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date as though such representations and warranties were
made at and as of such time except for changes permitted or contemplated by this
Agreement and except for representations or warranties made as of a specific
date; Seller shall have performed and be in compliance in all material respects
with all of the covenants, agreements, terms and provisions set forth herein on
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its part to be observed or performed, and no event which would constitute a
material breach of the terms of this Agreement on the part of Seller shall have
occurred and be continuing at the Closing Date.
(b) Since the date of this Agreement, (i) there shall not have
occurred any material adverse change with respect to the Acquired Systems or
their financial condition or operations, taken as a whole, other than (a)
matters of a general economic nature or any change affecting the United States
cable industry as a whole; (b) matters caused by or arising from legislation,
rulemaking or regulation affecting the cable industry in general; or (c)
competition caused by or arising from other multiple channel distribution
services; and (ii) there has been no material damage, destruction, loss or other
casualty to the Assets to be Acquired, taken as a whole, that has not been
repaired or replaced.
(c) The number of "Equivalent Basic Subscribers" of the
Acquired Systems for the month of Closing shall not be less than 90% of the
Equivalent Basic Subscribers of the Acquired Systems for the same month of the
Date of Closing in the year 1997. The parties acknowledge and agree that Exhibit
B attached hereto sets forth the number of Equivalent Basic Subscribers for each
month of the year 1997. For example, if the Date of Closing were to occur in
August of 1998, Buyer and Seller would look at the number of Equivalent Basic
Subscribers for the Acquired Systems in August of 1997 as shown on Exhibit B.
Per Exhibit B, the Acquired Systems had 42,549 Equivalent Basic Subscribers in
August of 1997. Buyer's condition to Closing would then be that the number of
Equivalent Basic Subscribers for the month of Closing (August) would not be less
than 38,294.
(d) The general partner of Seller shall have executed and
delivered to Buyer on the Closing Date a Certificate, dated that date, in form
and substance reasonably satisfactory to Buyer to the effect that the conditions
set forth in each of the provisions of Section 6.01(a) and (b) of this Agreement
have been satisfied in full.
(e) Seller shall have delivered to Buyer complete and correct
copies of the resolutions of its general partner authorizing the execution,
delivery and performance of the Seller Transaction Documents and the sale of the
Assets to be Acquired and the transactions contemplated hereby, certified by the
general partner of Seller.
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(f) Seller shall have obtained and delivered to Buyer each of
the consents of the governmental agencies and third parties designated on
Schedule 3.02 as Required Consents, with no adverse conditions imposed by such
consents; provided, however, that for the purposes of this Section 6.01(f), the
consent of the respective utilities with whom Seller has pole attachment
agreements shall be deemed to have been given if, as of the Date of Closing, any
such utility company is not threatening to: (a) refuse to consent to the
assignment of such pole attachment agreement to Buyer; (b) refuse to execute
with Buyer a replacement pole attachment agreement in such form as is
customarily executed by such utility with cable television companies and which
does not contain material changes from the agreement heretofore existing between
Seller and the utility company; or (c) order or otherwise compel the removal of
the cable plant owned by Seller from such utility poles. Notwithstanding the
foregoing, Seller agrees to continue to use Seller's good faith, commercially
reasonable efforts subsequent to the Date of Closing to complete the assignment
to Buyer of any pole attachment agreements not actually transferred to Buyer as
of the Date of Closing.
(g) Buyer shall have received a legal opinion from the General
Counsel of the general partner of Seller, dated the Closing Date and in a form
mutually agreeable to both Seller and Buyer.
(h) Seller shall have delivered to Buyer:
(i) the Non-Competition Agreements duly executed
by Seller and its general partner;
(ii) the Good Standing Certificates described in
Section 5.10; and
(iii) a certificate of incumbency of the general
partner of Seller duly executed by the
Assistant Secretary and each of the officers
of the general partner executing this
Agreement and the documents delivered
hereunder on behalf of Seller.
(i) Buyer shall have received an opinion of Cole, Raywid, &
Braverman, LLP, FCC counsel for Seller, dated the Closing Date and in a form
mutually agreeable to Seller, Buyer and Seller's FCC counsel.
(j) All documents and other items required to be delivered
hereunder to Buyer at or prior to Closing shall have been delivered or shall be
tendered at the Closing.
(k) On the Closing Date, no suit or action or other proceeding
shall be pending or threatened before any court or other governmental agency
against Seller or Buyer in which the consummation of the transactions
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contemplated by this Agreement are sought to be enjoined.
(l) Seller shall have delivered to Buyer, at Seller's expense,
at least ten (10) days prior to the Closing Date, lien searches dated not more
than forty (40) days prior to the Closing Date showing all UCC-1 financing
statements filed with any filing offices in the States of Florida and Colorado
wherein Seller is named a debtor, all federal, state or local tax liens filed
against the Seller, and all unsatisfied judgments naming Seller as a judgment
debtor, all of which shall be released or terminated prior to or at the Closing.
(m) All notification and report forms required to be filed on
behalf of the parties to this Agreement with the FTC and the DOJ under the HSR
Act and rules shall have been filed, and the waiting period required to expire
under the HSR Act and rules, including any extension thereof, shall have expired
or early termination of the waiting period shall have been granted.
(n) Seller shall have delivered to Buyer a commitment or
commitments for owners title insurance with respect to real estate owned by
Seller as part of the Assets to be Acquired, issued by a nationally reputable
entity, agreeing to insure fee simple title to each parcel of real property,
subject only to the Permitted Liens including, but not limited to, (i) zoning
restrictions, prohibitions, and other requirements imposed by any governmental
authority having jurisdiction over the property, (ii) public utility easements
of record, (iii) taxes not yet due and payable, (iv) easements, rights-of-way,
restrictions, and other similar encumbrances of record, and (v) other standard
exceptions, including survey exceptions. Such commitment or commitments shall be
dated not more than sixty (60) days prior to the Closing Date (provided that any
insurance shall be obtained at Buyer's cost).
(o) .Seller shall stand ready to deliver the matters described in
Section 8 hereof.
7. CONDITIONS TO CLOSING - SELLER.
7.01 Conditions to Obligations of Seller. The obligations of the Seller
to consummate the sale of the Assets to be Acquired at Closing shall be subject
to the satisfaction of the following conditions precedent, except to the extent
waived by Seller in writing:
(a) All of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date as though such representations and warranties were
made at and as of such time, and Buyer shall be in compliance in all material
respects with all of the covenants, agreements, terms and provisions set forth
herein on its part to be observed and performed, and no event which would
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constitute a material breach of the terms of this Agreement on the part of Buyer
shall have occurred and be continuing at the Closing Date.
(b) An executive officer of Buyer shall have executed and
delivered to Seller on the Closing Date a Certificate, dated that date, in form
and substance reasonably satisfactory to Seller to the effect that the
conditions set forth in each of the provisions of Section 7.01 (a) of this
Agreement have been satisfied in full.
(c) Buyer shall have delivered the Purchase Price, as
adjusted, to Seller in accordance with Section 2.03.
(d) Buyer shall have delivered to Seller complete and correct
copies of the corporate resolutions of Buyer authorizing the execution, delivery
and performance of this Agreement and the purchase of the Assets to be Acquired.
(e) Seller shall have received an opinion from Colin Higgin,
Deputy General Counsel for Buyer, dated the Closing Date substantially in the
form mutually agreeable to both Seller and Buyer.
(f) On the Closing Date, no suit or action or other proceeding
shall be pending or threatened before any court or other governmental agency
against Seller or Buyer in which the consummation of the transactions
contemplated by this Agreement are sought to be enjoined.
(g) Buyer shall have executed and delivered to Seller
assumption documents in form and substance reasonably satisfactory to Seller
pursuant to which Buyer shall have assumed the Assumed Liabilities.
(h) Buyer shall have delivered to Seller Certificates of Good
Standing issued by the Secretary of State of Delaware and the Commonwealth of
Pennsylvania as to Buyer's good standing in such jurisdictions.
(i) All notification and report forms required to be filed on
behalf of the parties to this Agreement with the FTC and the DOJ under the HSR
Act and rules thereunder shall have been filed, and the waiting period required
to expire under the HSR Act and rules thereunder, including any extension
thereof, shall have expired or early termination of the waiting period shall
have been granted.
(j) Buyer shall have delivered to Seller a certificate of
incumbency duly executed by the Assistant Secretary of the Buyer and each of the
officers of Buyer executing this Agreement and the documents delivered
hereunder.
(k) Seller shall have obtained the consent of each applicable
franchising authority to the transfer of the Franchises to Buyer.
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8. CLOSING.
8.01 Action to be Taken at and after Closing.
(a) At Closing, Seller shall deliver to Buyer:
(i) Such bills of sale, endorsements,
assignments, general warranty deeds and
other good and sufficient instruments of
transfer and conveyance as shall be
reasonably deemed necessary or appropriate
by Buyer to vest in or confirm to Buyer good
and marketable title to all of the assets
and properties constituting the Assets to be
Acquired, free and clear of any and all
liens, security interests, mortgages,
charges or encumbrances of any kind, except
for current taxes which are not yet due and
payable but which are timely paid and except
for the Permitted Liens;
(ii) A complete itemized list of all of Seller's
subscriber accounts receivable relating to
the Acquired Systems as of a date no later
than thirty (30) days prior to the Closing
Date, showing sums due and their respective
aging for the period ending on the Closing
Date;
(iii) With respect to the Acquired Systems, a
true, accurate and complete schedule as of
the Closing Date of monetary obligations
owed by Seller and not yet paid, items
billed to Seller and not yet paid, items
charged to or claimed against Seller and not
yet paid, whether or not disputed, under
each of the Franchises, Pole Attachment
Agreements and Agreements to be assumed by
Buyer under the terms of this Agreement;
(iv) Actual possession and operating control of
the Acquired Systems;
(v) The documents and instruments required to be
delivered by Seller to Buyer pursuant to the
terms of Section 6; and
(vi) All of the consents designated as Required
Consents on Schedule 3.02.
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(b) At Closing, Buyer shall deliver to Seller:
(i) The Purchase Price, as adjusted in
accordance with Section 2.06; and
(ii) The documents and instruments required to be
delivered by Buyer to Seller pursuant to the
terms of Section 7.
(c) After Closing, Seller shall deliver to Buyer, as
received from time to time:
(i) any cash or other property that it may
receive in respect to subscriber accounts
receivable received after the Closing Date
relating to the business and operations of
the Acquired Systems arising prior to or
subsequent to the Closing Date;
(ii) any Assets to be Acquired not effectively
transferred to Buyer at the Closing;
and
(iii) from time to time at the request of Buyer
and without further consideration, such
further instruments of conveyance, transfer
and assignment as Buyer may reasonably
request in order to convey more effectively
the transfer to Buyer of any of the Assets
to be Acquired, and Seller shall assist
Buyer in the reduction to possession of any
such assets, possession of which was not
delivered to Buyer at Closing. Buyer shall
be responsible for the preparation of all of
the documents incidental to such conveyance,
transfer and reduction to possession.
9. REAL ESTATE PRORATION AND ADJUSTMENT ITEMS. Water and sewer charges,
municipal garbage and rubbish removal charges, rents, interest, real estate
taxes, common area maintenance charges, utilities and other charges of an annual
or recurrent nature, assessed against or paid in conjunction with the ownership
or operation of any real property owned or leased by Seller to be transferred to
Buyer hereunder shall be prorated as of the Closing Date. Real estate taxes
shall be prorated as of the Closing Date. Real estate taxes for the calendar
year of Closing shall be prorated based upon real estate taxes levied or
estimated to be levied in that year by each taxing body (without regard to the
date of levy or the fiscal year of the taxing body); provided, however, if any
of such real estate taxes have not yet been levied as of the Closing Date for
the calendar year in which the Closing Date occurs, the tax PRORATION shall be
based upon the prior years tax levy, taking into account any adjustments in real
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estate tax assessments which may have been made. Upon final levy of the real
estate taxes, Seller and Buyer agree that a final proration will be made as of
the Closing Date, and if it is determined that either party shall owe the other
based upon a discrepancy between the amounts included in the Final Adjustment
and the final proration, then the owing party shall make payment to the other
within thirty (30) days of final settlement thereof
10. DAMAGE TO PROPERTY AND RISK OF LOSS.
(a) .The risk of any loss or damage to the Assets to be Acquired and
the Acquired Systems resulting from fire, theft or any other casualty (but
excluding any loss or damage attributable to reasonable wear and tear)
("Damage") shall be borne by Seller at all times prior to the Closing. In the
event that any such Damage shall be sufficiently substantial so as to preclude
and prevent resumption of normal operations of all or any portion of the
Acquired Systems within thirty (30) days from the occurrence of the event
resulting in such loss or damage, Seller shall immediately notify Buyer in
writing of its inability to resume normal operations or to replace or restore
the lost or damaged property, and Buyer, at any time within ten (10) days after
receipt of such notice, may elect either (a) to waive such defect and proceed
toward consummation of the transaction in accordance with the terms of this
Agreement, or (b) to terminate this Agreement. If Buyer elects to terminate this
Agreement pursuant to this Section, the parties hereto shall stand fully
released and discharged of any and all obligations hereunder and the Deposit
shall be returned to Buyer.
(b) .If Buyer shall elect to consummate this transaction
notwithstanding such Damage and does so, there shall be no diminution of the
Purchase Price, and all insurance proceeds (other than for bodily injury or for
damage to property other than the Assets to be Acquired or for business
interruption prior to the Closing Date) payable as a result of the occurrence of
the event resulting in the Damage shall be delivered to Buyer, or the rights
thereto shall be assigned to Buyer if not yet paid over to Seller, and Seller
shall pay to Buyer the amount of any deductible associated with the insurance
claim.
(c) .Notwithstanding the provisions of this Section 10, in the event of
Damage to the Acquired Systems which is not material damage to the Acquired
Systems, Seller shall have the full responsibility for the completion of all
necessary repair and/or restoration work with respect to such damage, whether or
not such work is capable of being completed prior to the Closing Date, and shall
promptly and with due diligence, in a prudent and workmanlike manner, proceed
with such work, time being of the essence.
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11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
11.01 Survival of Representations and Warranties. All representations,
warranties, covenants, stipulations, certifications, indemnities and agreements
contained herein or in any document delivered pursuant hereto shall survive the
consummation of the transactions provided for in this Agreement; provided that
the representations and warranties contained in this Agreement shall expire and
be extinguished six months after the Closing Date, except for representations
and warranties relating to (i) title and ownership, which shall survive forever,
(ii) environmental matters, which shall survive for five years, and (iii) tax
matters, which shall survive until the third annual anniversary of the Closing
Date, and Buyer's and Seller's rights to make claims based thereon shall
likewise expire and be extinguished on such dates. The parties hereto
acknowledge and agree that Seller shall remain responsible for any refund
liability with respect to the rates charged by Seller in the Acquired Systems
through the Closing Date and Buyer's right to be indemnified for any such claims
shall survive forever.
11.02 Indemnification.
(a) Seller and Jones shall, jointly and severally, defend,
indemnify and hold Buyer harmless from and against any and all claims,
liabilities, damages, losses, deficiencies and expenses (including reasonable
attorneys' fees and expenses and costs of suit including, but not limited to,
travel expenses and discovery costs for such matters as transcripts,
photocopying, subpoenas and telecopies) (individually, a "Loss" and
collectively, "Losses") arising out of (i) any and all inaccurate
representations and warranties, and out of any and all breaches of covenants,
agreements and certifications made by or on behalf of Seller in this Agreement
or in any document delivered hereunder, (ii) any failure to comply with any
applicable bulk transfer acts, or (iii) any and all liabilities and obligations
of Seller (except for the Assumed Liabilities) and any and all liabilities and
obligations of Seller not disclosed to Buyer in this Agreement; provided that in
connection with the indemnification provided for in Section 11.02(a)(i) hereof,
Seller and Jones shall not be obligated to indemnify Buyer for Losses subject to
indemnification thereunder (other than Losses relating to tax matters) once the
total amount of Losses for which Seller and Jones have provided indemnification
under such Section 11.02(a)(i) equals $7,500,000 ("Seller's Cap"). Buyer shall
not be entitled to be indemnified by Seller or Jones for any Losses under this
Section 11.02(a) arising out of any single claim or aggregate claims until the
total amount of all such Losses suffered or paid by Buyer exceeds $500,000
("Seller's Basket"). Buyer shall then be entitled to be indemnified for all such
Losses under this Section 1.02(a) arising out a single claim or aggregate
claims. For example, if the total amount of such Losses equals $502,000, Buyer
shall be entitled to be indemnified for the entire amount of such Losses, and
not just the amount of Losses in excess of $500,000.
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(b) Buyer shall defend, indemnify and hold Seller harmless
from and against any and all Losses arising out of (i) any and all inaccurate
representations, and out of any and all breaches of covenants, warranties,
stipulations, agreements and certifications made by or on behalf of Buyer in
this Agreement or in any document delivered by Buyer hereunder; (ii) the Assumed
Liabilities; and (iii) all debts, liabilities or claims owing by or against
Buyer subsequent to the Closing Date or arising out of the business activities
of Buyer subsequent thereto.
11.03 Indemnification with Respect to Third-Party Claims.
(a) Definition. As used herein, a "Third-Party Claim" means a
Loss or potential Loss for which indemnification is claimed by Buyer or Seller
(the "Indemnitee") under the provisions of this Article 11 and which is
consequent to a claim against the Indemnitee by a person, corporation,
association, partnership or other business organization, or an individual, or a
government, any political subdivision thereof or a governmental agency by
commencement against the Indemnitee of a legal action or proceeding or receipt
by the Indemnitee of an assertion of a claim for which indemnification is
provided pursuant to this Article 11 by Buyer or Seller and Jones, as the case
may be (the "Indemnitor").
(b) The Indemnitee will give notice of a Third-Party Claim to
the Indemnitor, together with, if such Third-Party Claim is subject to
arbitration pursuant to Section 14 hereof, demand for arbitration, stating the
nature thereof and enclosing copies of any complaint, summons, written assertion
of such Third-Party Claim or similar document. No claim for indemnification on
account of a Third-Party Claim shall be made and no indemnification therefor
shall be available under this Article 11 until the Indemnitee shall have given
initial written notice of its claim to the Indemnitor.
(c) Retention of Counsel by the Indemnitor. Except as
hereinafter provided (including, but not limited to, Section 11.03(d)(ii)
hereof), the Indemnitor shall engage counsel to defend a Third-Party Claim, and
shall provide notice to the Indemnitee not later than 15 business days following
delivery by the Indemnitee to the Indemnitor of a notice of a Third-Party Claim.
The Indemnitee will fully cooperate with such counsel. The Indemnitor will cause
such counsel to consult with the Indemnitee as appropriate as to the defense of
such claim, and the Indemnitee may, at its own expense, participate in such
defense, assistance or enforcement, but the Indemnitor shall control such
defense, assistance or enforcement. The Indemnitor will cause such counsel
engaged by the Indemnitor to keep the Indemnitee informed at all times of the
status of such defense, assistance or enforcement.
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(d) Employment of Counsel by the Indemnitee.
(i) Notwithstanding the provisions of Section
11.03(c), the Indemnitee shall have the
right to engage counsel and to control the
defense of a Third-Party Claim if the
Indemnitor shall not have notified the
Indemnitee of its appointment of counsel and
control of the defense of a Third-Party
Claim pursuant to Section 11.03 (c) within
the time period therein provided.
(ii) Notwithstanding the engagement of counsel
by the Indemnitor, the Indemnitee shall have
the right, at its own expense, to engage
counsel to participate jointly with the
Indemnitor in, and to control jointly with
the Indemnitor, the defense of a Third-Party
Claim if (x) the Third-Party Claim involves
remedies other than monetary damages and
such remedies, in the Indemnitee's
reasonable judgment, could have an effect on
the conduct of the Indemnitee's business, or
(y) the Third-Party Claim relates to acts,
omissions, conditions, events or other
matters occurring after the Closing Date as
well as to acts, omissions, conditions,
events or other matters occurring prior to
the Closing Date, or (z) the claims involve
monetary damages which could exceed Seller's
Cap.
(iii) If the Indemnitee chooses to exercise its
right to appoint counsel under this Section
11.03(d), the Indemnitee shall deliver
notice thereof to the Indemnitor setting
forth in reasonable detail why it believes
that it has such right and the name of the
counsel it proposes to employ. The
Indemnitee may deliver such notice at any
time that the conditions to the exercise of
such right appear to be fulfilled, it being
recognized that in the course of litigation,
the scope of litigation and the amount at
stake may change. The Indemnitee shall
thereupon have the right to appoint such
counsel.
(iv) The reasonable fees and expenses of counsel
and any accountants, experts or consultants
engaged by the Indemnitee in accordance with
the provisions of Section 11.03(d)(i) in
connection with defending a Third-Party
Claim shall be paid by the Indemnitor in
accordance with the provisions of this
Article 11. If the Indemnitee's employment
of counsel is for a Third-Party Claim of the
type described in subdivision (ii)(y) or
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(ii)(z) of this Section 11.03(d), then
subject to the provisions of Section
11.03(e), the amount of fees and expenses so
payable by the Indemnitor shall be that
fraction of the aggregate of such fees and
expenses, the numerator of which is the
portion of the amount of any judgment on, or
settlement of, such Third-Party Claim for
which the Indemnitee is indemnified pursuant
to this Article II and the denominator of
which is the total amount of such judgment
or settlement, but provided further, if such
defense of a Third-Party Claim is successful
(in the sense that as a consequence thereof,
there is no Loss (other than such fees and
expenses) for which the Indemnitee is
indemnified pursuant to this Article 11),
the Indemnitee and the Indemnitor will
attempt in good faith to reach an agreement
on the amount of such fees and expenses so
payable by the Indemnitor.
(e) Settlement of Third-Party Claims.
(i) The Indemnitor may settle any Third-Party
Claim solely involving monetary damages only
if the amount of such settlement is to be
paid entirely by the Indemnitor pursuant to
this Article 11.
(ii) The Indemnitor will not enter into a
settlement of a Third-Party Claim which
involves a non-monetary remedy or which will
not be paid entirely by the Indemnitor
pursuant to this Article 11 without the
written consent of the Indemnitee (which
consent shall not be unreasonably withheld,
delayed or conditioned).
(iii) The Indemnitee will not enter into a
settlement of a Third-Party Claim without
the written consent of the Indemnitor, which
consent shall not be unreasonably withheld,
under the circumstances described in
subdivision (i) of Section 11.03(d), if the
Indemnitor has accepted all or any portion
of the liability for such Third-Party Claim.
Otherwise, the Indemnitee shall be free to
compromise, defend and settle Third-Party
Claims without prejudice to any of its
rights hereunder or under applicable law.
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(iv) As to any Third-Party Claim of the type
described in Subsection (ii)(y) or
Subsection (ii)(z) of Section 11.03(d), the
Indemnitee and the Indemnitor shall consult
as to any proposed settlement. If the
Indemnitee notifies the Indemnitor that it
wishes to accept a proposed settlement and
the Indemnitor is unwilling to do so, if the
amount for which the Third-Party Claim is
ultimately resolved is greater than the
amount for which the Indemnitee desired to
settle, then (x) the Indemnitee shall be
liable only for the amount, if any, which it
would have paid had the Third-Party Claim
been settled as proposed by the Indemnitee,
and (y) all reasonable attorneys' fees and
expenses and costs of suit incurred by the
Indemnitee subsequent to the time of the
proposed settlement shall be paid or
reimbursed by the Indemnitor.
(v) In determining whether to accept or reject
any settlement proposal, each party shall
act in good faith and with due regard for
the reasonable commercial and financial
interests of the other.
(f) Claims as to Which Indemnification is Partially Payable.
Notwithstanding the foregoing, in the event of any settlement of, or final
judgment with respect to, a Third-Party Claim which relates to acts, omissions,
conditions, events or other matters occurring both before and after the Closing
Date, the Indemnitee and the Indemnitor shall negotiate in good faith as to the
portion of such Third-Party Claim as to which such indemnification is payable.
(g) Cooperation, etc. The Indemnitee and the Indemnitor shall
cooperate with one another in good faith in connection with the defense,
compromise or settlement of any claim or action. Without limiting the generality
of the foregoing, the party controlling the defense or settlement of any matter
shall take steps reasonably designed to ensure that the other party and its
counsel are informed at all times of the status of such matter. Neither party
shall dispose of, compromise or settle any claim or action in a manner that is
not reasonable under the circumstances and in good faith. The Indemnitor and
Indemnitee shall enter into such confidentiality and other non-disclosure
agreements as the Indemnitee or Indemnitor, as the case may be, shall reasonably
request in order to protect trade secrets and other confidential or proprietary
information of the Indemnitee or Indemnitor, as the case may be.
12. TERMINATION AND REMEDIES.
12.01 Termination by Mutual Agreement. This Agreement may be terminated
prior to Closing (i) by mutual agreement of Seller and Buyer or (ii) by Buyer in
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the event of a substantial loss under Section 10. In such event, this Agreement
shall terminate and neither Buyer nor Seller shall have any further obligation
or liability to the other hereunder, except that Sections 14, 15, 16.05, 16.06
and 16.07 of the Agreement shall survive and continue in full force and effect
notwithstanding such termination.
12.02 Buyer's Default. In the event that the transactions contemplated
by this Agreement are not consummated on the Closing Date (if and as extended
upon the mutual agreement of Seller and Buyer) due to Buyer's failure or refusal
to close, and Seller is not in material default under the terms and provisions
hereof, then Seller shall be entitled to terminate this Agreement and pursue any
and all of its legal and equitable causes of action against Buyer, including
without limitation, the remedy of specific performance by Buyer of it
obligations hereunder. Notwithstanding anything to the contrary contained in
this Agreement, Buyer and Seller acknowledge that Seller may apply all, or any
portion of, the Deposit against any damages incurred by Seller as a result of
Buyer's failure or refusal to close or as a result of Buyer's breach of any of
the terms and provisions of this Agreement. The application of the Deposit
against any such damages incurred by Seller shall be governed by the terms and
provisions of the Escrow Agreement. In no event shall the amount of the Deposit
be deemed to limit or restrict the monetary damages that Seller may assert
against Buyer in the event of a default by Buyer under the terms and provisions
of this Agreement and in no event shall the forfeiture of all or any portion of
the Deposit by Buyer be deemed or construed as payment of liquidated damages for
Buyer's default under the terms and provisions hereof. Notwithstanding the
foregoing, Seller acknowledges that in the event that the amount of damages
incurred by Seller as a result of Buyer's breach of the terms and provisions of
this Agreement is less than the amount of the Deposit, then that portion of the
Deposit which is not applied by Seller towards such damages shall be returned to
Buyer.
12.03 Seller's Default. In the event that the transactions contemplated
by this Agreement are not consummated on the Closing Date (if and as extended
upon the mutual agreement of Seller and Buyer) due to Seller's failure or
refusal to close, and Buyer is not in material default under the terms and
provisions hereof, then Buyer shall have the right to terminate the Agreement
and Buyer shall be entitled to pursue any and all of its equitable and legal
causes of action against Seller, including, without limitation, the remedy of
specific performance by Seller of its obligations hereunder, and without regard
to Seller's Cap on damages provided in Section 11.02(a).
12.04 Termination by Buyer or Seller. This Agreement may be terminated
by Buyer or Seller at any time after October 31, 1998 (the "Termination Date")
in the event that any condition set forth in Sections 6 or 7 hereof has not been
satisfied or tendered by the party owing performance for any reason other than a
material breach or default by such party of its respective covenants,
agreements, or other obligations under this Agreement, unless such condition has
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been waived by the party for whose benefit the condition is intended. Upon such
termination, neither Buyer nor Seller shall have any further obligation or
liability to the other hereunder, except that Sections 14, 15, 16.05, 16.06 and
16.07 of this Agreement shall survive and continue in full force and effect
notwithstanding such termination.
13. NOTICE. All notices and other communications hereunder shall be in writing
and delivered by one of the following methods of delivery: (i) personally, (ii)
by registered or certified mail, return receipt requested, postage prepaid,
(iii) by overnight courier, or (iv) by legible facsimile transmission, in all
cases addressed as follows:
To Buyer:
Olympus Communications, L.P.
c/o Adelphia Communications Corporation
5 West Third Street
Coudersport, PA 16915
Telecopy: (814) 274-8631
Attention: Colin H. Higgin, Esq.
With a copy to:
Buchanon Ingersol Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburg, Pa 15219-1041
Telecopy: (412) 562-1041
Attn: Thomas G. Buchanon, Esq.
To Seller or Jones:
Jones Intercable, Inc.
9697 E. Mineral Avenue
Englewood, CO 80112
Telecopy: (303) 799-4675
Attention: President
With a copy to:
Jones Intercable, Inc.
9697 E. Mineral Avenue
Englewood, CO 80112
Telecopy: (303) 799-1644
Attention: General Counsel
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or to such address as such party may indicate by a notice delivered to the other
parties hereto. Notice shall be deemed received the same day (when delivered
personally), five (5) days after mailing (when sent by registered or certified
mail) or the next business day (when sent by facsimile transmission or when
delivered by overnight courier). Any party to this Agreement may change its
address to which all communications and notices may be sent hereunder by
addressing notices of such change in the manner provided.
14. BROKERAGE COMMISSION. Buyer and Seller each represent and warrant that all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried on by each directly with the other without intervention of any
person, except that Seller has retained The Jones Group, Ltd. ("Seller's
Broker") as its sole broker and finder in connection with this Agreement and the
transactions contemplated hereby, and Seller has agreed to pay the entire
commission of Seller's Broker. Buyer shall have no liability or responsibility
for the commissions payable to the Seller's Broker. Each party to this Agreement
indemnifies the other and holds it harmless against and in respect of any claim
against the other for brokerage or other commissions relative to this Agreement
and the transactions contemplated hereby by the indemnifying party's employees,
agents or consultants.
15. LAWS GOVERNING.
15.01 Laws Governing. The construction, interpretation and enforcement
of this Agreement and the rights of the parties hereunder shall be governed by
the laws of the State of Florida without regard to any jurisdiction's conflicts
of law provisions.
15.02 Consent to Jurisdiction. Each of the parties hereto hereby
irrevocably consents and submits to the nonexclusive personal jurisdiction of
the United States District Court for the Southern District of Florida and the
courts of Lee County, Florida over any suit, action or proceeding under this
Agreement, and irrevocably agrees that all claims with respect thereto may be
heard and determined in such courts. Service of process in any such suit, action
or proceeding may be made in the manner hereinabove set forth for the giving of
notices and the same shall constitute valid personal service for all purposes,
each party hereby waiving personal service by other means.
16. MISCELLANEOUS.
16.01 Counterparts; Telecopy. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which,
when taken together, shall constitute one and the same instrument. Delivery of
executed signature pages hereof by facsimile transmission shall constitute
effective and binding execution and delivery hereof.
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16.02 Assignment. This Agreement may not be assigned by any party
hereto without the prior written consent of the other parties; provided,
however, that Buyer may assign this Agreement to one or more of the subsidiaries
or affiliates of Buyer, without the prior written consent of Seller, provided
Buyer remains primarily liable to fully perform the terms of this Agreement.
16.03 Entire Agreement. This Agreement is an integrated document,
contains the entire agreement between the parties, wholly cancels, terminates
and supersedes any and all previous and/or contemporaneous oral agreements,
negotiations, commitments and writings between the parties hereto with respect
to such subject matter. No change, modification, termination, notice of
termination, discharge or abandonment of this Agreement or any of the provisions
hereof, nor any representation, promise or condition relating to this Agreement,
shall be binding upon the parties hereto unless made in writing and signed by
the parties hereto, except that termination or notices of termination which may
be effected pursuant to the terms of this Agreement by either party to the
Agreement shall be binding if made in writing and signed by the applicable
party.
16.04 Interpretation. Article titles and headings to Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of any of the provisions of this
Agreement. All references to Sections, subsections, Schedules or Exhibits
contained in this Agreement are references to the Sections and subsections of
this Agreement and the Schedules or Exhibits described on the list immediately
following the signature page hereto and attached hereto. All references to the
word "including" shall have the meaning represented by the phrase "including
without limitation." As used herein, the phrase "after due inquiry" is limited
to inquiry within the organization of Seller or Buyer, as the case may be. As
used herein, the phrase "commercially reasonable efforts" shall not be deemed to
require a party to undertake extraordinary measures, including the initiation or
prosecution of legal proceedings or the payment of amounts in excess of normal
and usual filing and processing fees, if any.
16.05 Expenses. Except as otherwise expressly provided herein, Seller
and Buyer each will pay all costs and expenses, including any and all legal and
accounting fees, of its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with. Seller
and Buyer agree to share equally (i) any sales or transfer taxes, recording fees
or other similar costs or fees payable in connection with the transfer of the
Assets to be Acquired, (ii) the costs and expenses relating to the appraisals
performed pursuant to Section 2.05, and (iii) the fees required under the HSR
Act.
16.06 Confidentiality. Any and all information obtained by Buyer from
Seller in connection with the transactions contemplated by this Agreement which
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is confidential in nature (collectively, the "Evaluation Material") shall be
kept strictly confidential by Buyer prior to the Closing Date; provided,
however, that any Evaluation Material may be disclosed to agents, employees,
officers, directors, investors, advisors and other representatives of Buyer who
need to know such Evaluation Material (it being agreed that such representative
shall be informed by Buyer of the confidential nature of such Evaluation
Material and shall be directed to deal with such Evaluation Material
confidentially) and, further, may be disclosed to the extent required by law,
including applicable securities laws, or by written or oral question or request
for information or documents in legal proceedings, interrogatories, subpoenas,
civil investigative demands or similar processes. For purposes of this
Agreement, the term "Evaluation Material" does not include information which (i)
becomes generally available to the public other than as a result of disclosure
by Buyer or any Buyer representative in violation of the terms hereof, (ii) was
available on a nonconfidential basis prior to disclosure to Buyer by Seller or
any of their directors or any of its directors, officers, employees, agents or
representatives, or (iii) becomes available to Buyer on a non-confidential basis
from a source which is not bound by a confidentiality agreement with Seller.
16.07 Public Announcements. Neither Buyer nor Seller shall, without the
approval of the other party (which may not be unreasonably withheld), make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall be so obligated by law (including any legal obligation imposed on Buyer in
connection with its status as a publicly-held corporation), in which case the
other party shall be advised and Buyer and Seller shall use their reasonable
efforts to cause a mutually agreeable release or announcement to be issued.
16.08 Waivers. Any term or provision of this Agreement may be waived,
or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof, but any such waiver must be in writing and must
comply with the notice provisions contained in Section 13. The failure of any
party hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
16.09 Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such a manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provisions had never been contained
45
<PAGE>
herein, unless the deletion of such provision or provisions would result in such
a material change as to cause the completion of the transactions contemplated
hereby to be unreasonable.
16.10 Incorporation by Reference. Any and all Schedules, Exhibits,
Recitals, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
thereto as though fully set forth at the point referred to in this Agreement.
16.11 Attorneys' Fees. Notwithstanding any other provision of this
Agreement, the prevailing party in any litigation or other legal proceeding
between Buyer and Seller with respect to this Agreement or the transactions
contemplated hereby shall be entitled to recover from the nonprevailing party
its reasonable attorneys' fees and costs of the proceeding.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized corporate officers on the day and year first
above written.
OLYMPUS COMMUNICATIONS, L.P.
By: ACP Holdings, Inc.,
its managing general partner
By: /s/ Timothy J Rigas
Title: Executive Vice President
CABLE TV FUND 12-A, LTD.,
a Colorado limited partnership
By: JONES INTERCABLE, INC.,
General Partner
By: /s/ Elizabeth Steele
Title: Vice President
JONES INTERCABLE, INC.
By: /s/ Elizabeth Steele
Title: Vice President
<PAGE>
Exhibit A
[Form of Noncompetition Agreement]
(See Separate Document Attached)
<PAGE>
Exhibit B
[Basic and Equivalent Subscribers for the Year 1997]
(See Separate Document Attached)
Exhibit 10.2
FIRST AMENDMENT
THIS FIRST AMENDMENT, dated as of July 31, 1998 (this 'Amendment'), is
among HIGHLAND VIDEO ASSOCIATES, L.P., a Pennsylvania limited partnership
('HVA'), TELESAT ACQUISITION LIMITED PARTNERSHIP, a Delaware limited partnership
('TALP'), GLOBAL ACQUISITION PARTNERS, L.P., a Delaware limited partnership
('Global'; Global, HVA and TALP are collectively referred to as the 'Borrowers')
and the Lenders (as defined below) signatories hereto.
W I T N E S S E T H:
WHEREAS, the Borrowers, certain financial institutions from time to
time parties thereto (collectively, the 'Lenders'), The Bank of Nova Scotia, as
Administrative Agent, Bank of Montreal, as the Syndication Agent and The Chase
Manhattan Bank (successor by merger to Chemical Bank), as the Documentation
Agent, are parties to the Amended and Restated Credit Agreement, dated as of
March 29, 1996 (as further amended, supplemented, amended and restated or
otherwise modified prior to the date hereof, the 'Existing Credit Agreement');
WHEREAS, the Borrowers have requested that the Lenders amend the
Existing Credit Agreement in certain respects in connection with the Global
Transaction, as defined below; and
WHEREAS, the Lenders have agreed, subject to the terms and conditions
set forth herein, to amend the Existing Credit Agreement as set forth below (the
Existing Credit Agreement, as amended by this Amendment, being referred to as
the 'Credit Agreement');
NOW, THEREFORE, in consideration of the agreements herein contained,
and for other valuable consideration the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows.
PART I
DEFINITIONS
SUBPART I.1. Definitions. Terms for which meanings are provided in the
Existing Credit Agreement are, unless otherwise defined herein or the context
otherwise requires, used in this Amendment with such meanings.
<PAGE>
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the First Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part.
SUBPART II.1. Amendments to Article I. Article I of the Existing Credit
Agreement is hereby amended as set forth in Subparts 2.1.1 and 2.1.2.
SUBPART II.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
'Asset Swap' means the disposition of the Global Assets in
exchange for 100% of the issued and outstanding shares of Central
Virginia and a minimum of 40,000 subscribers of Central Virginia, the
distribution of the Global Assets and 99% general partnership interest
in GCI to Adelphia, and the contemporaneous transfer of the 99% general
partnership interest in GCI from Adelphia to GCI II, in each case in
accordance with the terms of the Global Documents.
'Assignment Agreement' dated as of July 31, 1998, between
Adelphia and GCI II.
'Central Virginia' means Central Virginia Cable, Inc., a
Delaware corporation.
'Central Virginia Management Agreement' means the agreement,
dated January 1, 1995 between ACI and Central Virginia.
'Contribution Agreement' means the Contribution and Assignment
and Distribution Agreement, dated as of July 31, 1998, between Global
and Adelphia.
'First Amendment' means the First Amendment, dated as of July
31, 1998, among the Borrowers and the Lenders party thereto.
'First Amendment Effective Date' is defined in Subpart 3.1 of
the First Amendment.
'GCI II' means Global Cablevision II, Inc., a Delaware
corporation.
'Global Assets' means all or substantially all of the assets
and subscribers of Global, as further described in the Contribution
Agreement.
<PAGE>
'Global Documents' means, collectively, the Merger Agreement,
the Contribution Agreement, the Subscription Agreement, the Assignment
Agreement and the agreements and instruments delivered in connection
therewith, in each case as in effect on the First Amendment Effective
Date and thereafter as amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with Section 7.2.9.
'Global Transaction' means the (a) Asset Swap and (b) merger
of GCI into Adelphia, with Adelphia as the surviving corporation in
accordance with the terms of the Merger Agreement.
'Merger Agreement' means the Certificate of Ownership and
Merger of Global Cablevision, Inc. into Adelphia Communications
Corporation.
'Subscription Agreement' means the Subscription Agreement,
dated as of July 31, 1998, made by ACC to GCI II.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is hereby
further amended as follows:
(i) clause (e)(i) of the definition of 'Change in Control' is
amended in its entirety to read as follows:
'(i) the failure of Adelphia and/or its wholly-owned
Subsidiaries to own, directly free and clear of all Liens or
other encumbrances (other than in favor of the Administrative
Agent under a Loan Document), 100% of the outstanding general
and limited partnership interests in Global (which, on the
First Amendment Effective Date, shall be GCI II as the sole
general partner of Global and OPC as the sole limited partner
of Global)'
(ii) the definition of 'Management Agreements' is amended by
inserting the words 'the Central Virginia Management Agreement'
immediately before the words 'the Borrower Management Agreements';
(iii) clause (b)(ii) of the definition of 'Restricted
Subsidiary' is amended in its entirety to read as follows:
'(ii) Central Virginia (and each of its Subsidiaries) and each
other Subsidiary of TALP or Global formed or acquired after
the Amendment Effective Date that is not an Unrestricted
Subsidiary.'
SUBPART II.2. Amendments to Article VII. Article VII of the Existing
Credit Agreement is hereby amended as set forth in Subparts 2.2.1 through 2.2.3.
<PAGE>
SUBPART II.2.1. Section 7.2.5 of the Existing Credit Agreement is
hereby amended by (i) relettering clauses (g) and (h) as clauses (h) and (i)
respectively; (ii) deleting the word 'and' at the end of clause (e), and
inserting the word 'and' at the end of clause (f); and (iii) adding a new clause
(g), to read in its entirety as follows:
'(g) as of the First Amendment Effective Date, Investments
made by Global with respect to the acquisition of 100% of the
Capital Security of Central Virginia;'
SUBPART II.2.2. Sections 7.2.6 and 7.2.8 of the Existing Credit
Agreement are each hereby amended by adding a sentence at the end, to read in
its entirety as follows:
'Notwithstanding the foregoing, the distribution of the Global
Assets pursuant to the Global Documents shall be permitted
hereunder.'
SUBPART II.2.3. Section 7.2.9 of the Existing Credit Agreement is
hereby amended by (i) deleting the word 'or' at the end of clause (a); (ii)
deleting the period at the end of clause (b) and inserting '; or' in its place;
and (iii) adding a new clause (c), to read in its entirety as follows:
'(c) the Global Documents unless consented to by the
Administrative Agent.'
SUBPART II.2.4. Disclosure Schedule. The Disclosure Schedule is
hereby amended in its entirety to read as set forth in attached Schedule I.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART III.1. Effective Date and Conditions. This Amendment shall
become effective on the date (the 'First Amendment Effective Date') when each of
the conditions set forth in this Part have been satisfied.
SUBPART III.1.1. Organic Documents, etc. The Administrative Agent shall
have received, with counterparts for each Lender, certificates, dated the date
of the First Amendment Effective Date, executed and delivered by an Authorized
Officer of Central Virginia and of Global, as applicable, certifying, among
other things,
(a) that attached thereto is a true and complete copy of
Central Virginia=s Organic Documents and all amendments thereto,
certified by the Secretary of State of the State of Delaware and dated
a date reasonably near the First Amendment Effective Date;
<PAGE>
(b) that attached thereto are true and complete copies of all
partnership and corporate action taken by or on behalf of Global and
Central Virginia, as the case may be, authorizing the execution,
delivery and performance of this Amendment, each other Loan Document to
which Global or Central Virginia is a party and all other aspects of
the Global Transaction, and that such authorization has not been
modified, rescinded or amended and is in full force and effect;
(c) that attached thereto is a true and complete copy of
Central Virginia=s (A) Management Agreement and (B) Franchise
Agreements, in each case as in effect on the First Amendment Effective
Date, together with all amendments, waivers and other modifications
made thereto and a part thereof and that each such Management Agreement
and Franchise Agreement is in full force and effect; and
(d) as to the name, incumbency and specimen signature of each
Authorized Officer of Central Virginia authorized to execute this
Amendment and each other Loan Document to be executed by it (and the
Administrative Agent and each Lender may conclusively rely on such
certificate until it shall have received a further certificate
canceling or amending such prior certificate).
SUBPART III.1.2. Certificate Regarding Global Transaction. The
Administrative Agent shall have received, with counterparts for each Lender, a
certificate in form and substance satisfactory to the Administrative Agent with
respect to the Global Transaction, dated the First Amendment Effective Date and
duly executed and delivered by an Authorized Officer of Global, and all
documents and agreements required to be appended to such certificate shall be in
form and substance satisfactory to the Administrative Agent, including the
following:
(a) a true and complete copy of the Merger Agreement, the
Contribution Agreement and all other documents and instruments
delivered in connection with the consummation of the Global
Transaction;
(b) evidence satisfactory to the Administrative Agent that
Global and Central Virginia possess all governmental and third party
approvals and consents necessary in connection with the Global
Transaction, the execution, delivery and performance of this Amendment
and each other Loan Document executed in connection herewith, and for
the continued operation of their respective businesses, and that such
approvals and consents are in full force and effect (and, to the extent
requested by the Administrative Agent, the Administrative Agent shall
have received true and correct copies of such approvals and consents),
and that all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on the Global
Transaction;
<PAGE>
(c) copies of the Management Agreement to which Central
Virginia is a party, as in effect on the First Amendment Effective
Date, together with all amendments, waivers and other modifications
made thereto and a part thereof, and such Management Agreement shall be
in form and substance (including terms regarding the subordination to
the Obligations of all Management Fees payable thereunder) satisfactory
to the Administrative Agent; and
(d) copies of all FCC Licenses, material permits and other
rights, including, without limitation, all Franchises, owned, possessed
or used by Central Virginia which are necessary to own and operate its
properties and Cable Systems and to carry on its businesses as
conducted on the First Amendment Effective Date, and the Administrative
Agent shall be satisfied that all such instruments are in the name of
Central Virginia.
SUBPART III.1.3. Pro Forma Financials. The Administrative Agent shall
have received, with counterparts for each Lender, a certificate in form and
substance satisfactory to the Administrative Agent from an Authorized Officer of
Global demonstrating compliance with all financial covenants set forth in
Section 7.2.4 of the Existing Credit Agreement, on a pro forma basis (as of June
30, 1998 and after giving effect to the Global Transaction).
SUBPART III.1.4. Subscribers and 'Homes Passed'. The Administrative
Agent shall have received a subscriber's report with respect to Central Virginia
setting forth (i) the number of Basic Subscribers of Central Virginia, (ii) the
number of Premium Subscriptions of Central Virginia, and (iii) the number of
'homes passed'.
SUBPART III.1.5. Supplemental to the Global Partners Security
Agreement. The Administrative Agent shall have received, with counterparts for
each Lender, supplement to the Global Partners Security Agreement, in form and
substance satisfactory to the Administrative Agent, dated as of the First
Amendment Effective Date, duly executed and delivered by an Authorized officer
of GCI II together with:
(a) copies of Uniform Commercial Code financing statements
(Form UCC-1), naming GCI II as the debtor and the Administrative Agent
as the secured party, or other similar instruments or documents, to be
filed under the Uniform Commercial Code of all jurisdictions as may be
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the security interest of the Administrative Agent against GCI
II pursuant to the Global Partners Security Agreement, duly executed
and delivered by an Authorized Officer of GCI II; and
(b) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Administrative Agent, listing
all effective financing statements naming GCI II, as the debtor and
which are filed in the jurisdictions in which filings were made
pursuant to clause (a) above, together with copies of such financing
statements (none of which shall cover any collateral described in the
Global Partners Security Agreement).
<PAGE>
SUBPART III.1.6. Counterpart of the Subsidiary Guaranty. The
Administrative Agent shall have received, with counterparts for each Lender, a
signed counterpart of the Subsidiary Guaranty in form and substance satisfactory
to the Administrative Agent, dated as of the First Amendment Effective Date,
duly executed and delivered by an Authorized Officer of Central Virginia.
SUBPART III.1.7. Supplement to Global Pledge Agreement. The
Administrative Agent shall have received, with counterparts for each Lender, a
supplement to the Global Pledge Agreement dated the First Amendment Effective
Date and in form and substance satisfactory to the Administrative Agent executed
and delivered by an Authorized Officer of Global, together with certificates
evidencing 100% of the issued and outstanding shares of Capital Securities of
Central Virginia, which certificates shall be accompanied by undated stock
powers duly executed in blank, or if such shares of capital stock are
uncertificated, confirmation and evidence satisfactory to the Administrative
Agent that the evidence of the security interest has been registered with the
issuer of such uncertificated security.
SUBPART III.1.8. Supplement to Manager Subordination Agreement. The
Administrative Agent shall have received, with counterparts for each Lender, a
supplement to the Manager Subordination Agreement, in form and substance
satisfactory to the Administrative Agent, dated as of the First Amendment
Effective Date, duly executed and delivered by an Authorized Officer of Central
Virginia.
SUBPART III.1.9. Material Adverse Change. Since December 31, 1997,
there shall not have occurred a material adverse change with respect to the
cable television systems of Central Virginia or their financial condition or
operations, taken as of whole.
SUBPART III.1.10. Global Documents. The Global Transaction shall have
been consummated on the terms set forth in the Global Documents (with such
changes thereto as the Administrative Agent may agree to).
SUBPART III.1.11. Opinions of Counsel. The Administrative Agent shall
have received opinions, dated the First
Amendment Effective Date and addressed to the Administrative Agent and all
Lenders, from
(a) Colin Higgin, Deputy General Counsel to the Borrowers and
each other Obligor, in form and substance satisfactory to the
Administrative Agent; and
(b) Buchanan Ingersoll, a Professional Corporation, special
New York counsel to the Borrowers and each other Obligor, in form and
substance satisfactory to the Administrative Agent.
SUBPART III.1.12. Execution of Counterparts. The Administrative Agent
shall have received counterparts of this Amendment duly executed and delivered
on behalf of the Borrowers and the Required Lenders.
<PAGE>
SUBPART III.1.13. Affirmation and Consent. The Administrative Agent
shall have received an affirmation and consent in form and substance
satisfactory to it, duly executed and delivered by each Obligor.
SUBPART III.1.14. Legal Details, etc. All documents executed or
submitted pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information, and such counterpart originals or such
certified or other copies of such materials, as the Administrative Agent or its
counsel may reasonably request. All legal matters incident to the transactions
contemplated by this Amendment shall be satisfactory to the Administrative Agent
and its counsel.
PART IV
MISCELLANEOUS PROVISIONS
SUBPART IV.1. Cross-References. References in this Amendment to any
Part or Subpart are, unless otherwise
specified, to such Part or Subpart of this Amendment.
SUBPART IV.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendment is a Loan Document executed pursuant to the Existing Credit Agreement
and shall be construed, administered and applied in accordance with all of the
terms and provisions of the Existing Credit Agreement.
SUBPART IV.3. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
SUBPART IV.4. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Existing Credit Agreement and
the Loan Documents shall remain unchanged and shall continue to be, and shall
remain, in full force and effect in accordance with their respective terms. The
amendments set forth herein shall be limited precisely as provided for herein to
the provisions expressly amended herein and shall not be deemed to be an
amendment to, waiver of, consent to or modification of any other term or
provision of the Existing Credit Agreement, any other Loan Document referred to
therein or herein or of any transaction or further or future action on the part
of the Borrowers or any Obligor which would require the consent of the Lenders
under the Existing Credit Agreement or any of the Loan Documents.
<PAGE>
SUBPART IV.5. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING FOR SUCH PURPOSES SECTION 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THE VALIDITY OR
PERFECTION OF A SECURITY INTEREST OR MORTGAGE HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SUBPART IV.6. Execution in Counterparts. This Amendment may be executed
in any number of counterparts by the parties hereto, each of which counterparts
when so executed shall be an original, but all the counterparts shall together
constitute one and the same agreement.
SUBPART IV.7. Representations and Warranties. In order to induce the
Lenders to execute and deliver this
Amendment the Borrowers hereby represent and warrant to the Lenders that
(a) the execution, delivery and performance by them of this
Amendment are within their partnership powers, have been duly
authorized by all necessary partnership action, and do not contravene
(i) their Organic Documents or (ii) any law or contractual restriction
binding on them;
(b) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by them of
this Amendment;
(c) this Amendment constitutes their legal, valid and binding
obligation, enforceable against them in accordance with its terms,
subject, as to enforceability, to the effect of (i) any applicable
bankruptcy, insolvency, moratorium or similar law affecting creditors=
rights generally, and (ii) the effect of general principles of equity;
and
(d) immediately before and after giving effect to this
Amendment, all of the statements set forth in Section 5.4.1 of the
Existing Credit Agreement are true and correct.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers hereunto duly authorized as of the day and
year first above written.
HIGHLAND VIDEO ASSOCIATES, L.P.,
By: Highland Holdings, its General Partner
By: /s/ James P Rigas
Title:
TELESAT ACQUISITION LIMITED PARTNERSHIP
By: Olympus Communications, L.P., its General Partner
By: ACP Holdings, Inc., its Managing General Partner
By:/s/ Randall d Fisher
Title: Vice President
GLOBAL ACQUISITION PARTNERS, L.P.
By: Global Cablevision, Inc., its General Partner
By:/s/ Randall D Fisher
Title: Vice President
<PAGE>
LENDERS
THE BANK OF NOVA SCOTIA
By:/s/ Terry K Fryett
Title: Authorized Signatory
BANK OF MONTREAL, CHICAGO BRANCH
By:/s/ Karen Klapper
Title: Director
FIRST UNION NATIONAL BANK,
as successor by merger to Corestates Bank, N.A.
By:/s/ MKM
Title: Vice President
THE CHASE MANHATTAN BANK, as successor by merger to Chemical Bank
By:/s/ John Huber
Title: Managing Director
CIBC INC.
By:/s/ Michelle Roller
Title: Executive Director
<PAGE>
THE SUMITOMO BANK, LIMITED
By:/s/
Title:
By:
Title:
NATIONSBANK N.A. as successor by merger to
NATIONSBANK OF TEXAS, N.A.
By:/s/ Pamela Kurtzman
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
By:/s/ Neva Nessitt
Title: Vice President
FLEET NATIONAL BANK
By:/s/ Russ Lyrent
Title: Vice President
